Are you turning 65 this year? Is a parent or grandparent? One important task to take care of in the months around that 65th birthday is enrolling in Medicare. You (or your relative) need to enroll during this initial enrollment period (IEP) if your plans fit either of these situations:
This can make a difference to the future for both your budget and your health.
You'll be turning 65 this year, and you plan to apply to start receiving Social Security at that time.
You'll be turning 65 this year, but you plan to keep working and not apply for Social Security until you can receive full benefits at age 66 or at a later age up to 70.
The initial enrollment period (IEP) is the seven months surrounding your 65th birthday (3 months before, your birth month, 3 after). Can you enroll later? Yes. But enrolling after this initial period usually means that you will pay late enrollment penalties. That typically means that premiums for applicable parts of Medicare are a little higher, in most cases for as long as you are insured.
What Is Medicare?
Medicare is the federal health insurance program for people who are age 65 or older. It is also available to younger people who have certain disabilities or permanent kidney failure (called End-Stage Renal Disease) that requires dialysis or a transplant.
If you began to get Social Security benefits between age 62 and 65, you will typically begin to automatically receive Medicare Part A and Part B on the first of the month you turn 65. Your Medicare card will arrive in the three months before your 65th birthday.
If you apply for Social Security at age 65, you will automatically get Medicare coverage for hospital insurance (Part A) and medical insurance (Part B). If you've paid Medicare payroll taxes for at least 10 years during your working life (and most workers have), then there is no charge for Part A. But there is a small monthly premium for Part B. Premiums for part B are usually deducted directly from your monthly Social Security Payment.
If you don't plan to apply for Social Security until you are age 66 or older, then you will need to apply separately for Medicare coverage during the seven month period around the date you turn age 65. Although you could wait until later to apply for Medicare, late enrollment penalties mean you will pay more for Part B coverage and other coverage such as a Prescription Drug Plan unless certain special circumstances apply. You will directly pay premiums for Part B (and part D or an Advantage plan) until you apply for Social Security; Medicare will bill you.
If you don't plan to retire until after age 66 and are still covered by your employer's group health insurance, you don't need to apply for Medicare until you retire and that group coverage ends. This situation has a special enrollment period (SEP) when you can enroll without incurring penalties. Read more on Medicare.gov. Unless you are already getting Social Security benefits, you will directly pay premiums for Part B (and Part D or an Advantage Plan).
Enrolling in Medicare During the Initial Enrollment Period
Medicare's "initial enrollment period" (IEP) is seven months long: It includes the 3 months before you turn 65 (the recommended time to enroll), the month you turn 65, and the 3 months after your birthday. If you join during the 3 months before you turn 65, your coverage will begin the first day of the month you turn 65. If you join during the last 4 months of the initial enrollment period, your coverage will begin the first day of the month after you ask to join.
Enrolling is easy and you can do it in a few minutes online. Just go to Medicare.gov and follow the links.
If you don't enroll in Medicare during this initial enrollment period, then you can apply between January 1 and March 31 each year. But you usually will have to pay a higher premium for late enrollment. Note that the higher premium for Part B lasts as long as you have Part B.
If you don't enroll in Medicare during the initial enrollment period because you are still working and covered by your employer's group health insurance, then you have a special enrollment period of eight months. Note that COBRA policies and retiree health insurance are not considered employer-provided group health plans.
Is saving money the only reason to enroll in Medicare when you are first eligible during the IEP? No. Saving money is not necessarily the most important reason. U.S. insurance companies (and healthcare providers) expect that older Americans will enroll in Medicare and, as a result, the insurance plans and options they offer to older Americans take this expectation into account.
What Choices and Decisions Will You Need to Consider When Applying for Medicare?
Decide first between Original Medicare or a Medicare Advantage Plan.
Original Medicare includes hospital insurance (Part A) and medical insurance (Part B)
- It provides direct coverage.
- You can choose your doctors, hospitals, and other providers, so long as they accept Medicare.
You typically have some deductibles or co-pays but you may purchase supplemental coverage (Medigap Insurance) to cover those. Medigap insurance is provided by Medicare-approved private insurance companies and you can compare coverages and costs. Choosing a Medigap Policy can help you understand what a Medigap policy is and determine if you need one.
- You usually pay a monthly premium for Part B. This is deducted from your monthly benefit payment if you are already receiving Social Security; otherwise, Medicare bills you.
- If you want coverage for prescription drugs, you must choose and pay a premium for Part D Prescription Drug Plans. These plans come from approved private insurance companies. Drugs covered and costs differ among available plans so you will need to compare these.
Medicare Advantage Plans (called Part C) include hospital insurance (Part A) and medical insurance (Part B) and, usually, prescription drug coverage (Part D).
- These plans are provided by approved private insurance companies.
- In most Advantage plans, you must use doctors, hospitals and other healthcare providers that participate in the plan or you may pay more or all of the cost.
- Advantage plans usually include a premium in addition to Part B. They may or may not cover co-pays.
- Advantage Plan coverages and costs vary among companies and plans so you need to carefully compare which meet your needs before applying.
- Prescription drugs are covered by most Advantage plans but the list of specific drugs covered (the formulary) varies among plans and companies.
- It is illegal for any insurance company or broker to try to sell you Medigap insurance if you have an Advantage Plan.
Do you wish to enroll in Part D for prescription drug coverage? If you have chosen to enroll in Original Medicare, you should also consider enrolling in Part D, prescription drug coverage, at the same time.
- Part D is provided by approved private insurance companies and provides coverage for prescription drugs that are on the specific plan's formulary (the list of drugs covered).
- Coverages and premiums vary among companies and plans so compare policies carefully to see which coverage and terms best meet your needs before selecting a Plan D policy.
- Costs for premiums, deductibles, and co-pays differ among plans so compare carefully.
- If you do not enroll in Plan D during the initial enrollment period, you may enroll in Plan D in any year during the annual open enrollment period. But if you have not had prescription drug coverage from another creditable source (such as Medicare Advantage or an employer plan) for 63 days or more, you typically owe a penalty for late enrollment.
- See information about Drug Coverage (Part D) on Medicare.gov.
How Do You Get Started with Enrollment?
The easiest and best way is to use the online application process at www.Medicare.gov. Before you begin the application process, you can use the many educational resources available to learn more about Medicare options and which will help you meet your health needs and financial considerations.
We recommend three publications:
- Medicare and You. The Medicare handbook.
- Enrolling in Medicare Part A & Part B.
- Understanding Medicare Part C & Part D Enrollment Periods.
If you need to talk live to a real person, you can find contact information for both the national Medicare office and your state resources on the site.
Plan to Act
If the big 65 year is looming in your future or a relative's, take a little time soon to visit the Medicare.gov website. A little clicking through the helpful resources available there will help you plan ahead. A little effort now can help you get the health care coverage you need at the best price. That can make a difference to the future for both your budget and your health.