Medicare is complicated, but that’s no excuse to not understand what you’re signing up for. There are some things you must know about Medicare. The implications of making the wrong Medicare decisions can be significant, and I encourage any of you on Medicare to learn as much as you can before you finalize your elections.
Today, a true expert shares 7 Things You MUST Know About Medicare. Click To Tweet
I’m quick to admit that I’m not very knowledgeable about Medicare. Therefore, I found a true expert to help us understand this critical topic.
Danielle Kunkle is Vice President and Co-founder at Boomer Benefits, a Medicare insurance agency that is licensed in over 40 states. She is a resounding expert on the topic of Medicare, and we’re lucky to have her sharing her expertise with us today. One thing I’ve learned is to listen when an expert on a topic shares her knowledge. I encourage you all to listen today as she teaches us 7 Things You MUST Know About Medicare.
Note: The Annual Election Period runs from Oct 15 – Dec 7, so now is the time to investigate your options if you’re eligible for Medicare. Also, Boomer Benefits offers a FREE 6-day Medicare e-mail course which I’d encourage you to check out here.
7 Things You MUST Know About Medicare
Medicare is confusing to many people when they turn 65. There are so many different rules, guidelines, coverage options, enrollment periods, and penalties to learn about.
To cut through the fluff, here are 7 Things You Must Know About Medicare. Some of these facts include knowledge that you’ll need prior to enrolling, while others have helpful reminders for each year you are enrolled in Medicare.
1. Medicare is NOT Free
Many Medicare beneficiaries are both surprised and upset about this. You might be thinking, “I have been paying into it for forever, it should be free!” The truth is, you only pay into Medicare Part A during your working years. That’s why for most people, Part A hospital coverage costs nothing at the time of enrollment.
For most people, Part B outpatient coverage costs $134 per month in 2018. (Some higher income-earners pay more) This amount is updated by Medicare annually. You will pay a monthly premium for Part B as long as you are enrolled in it unless you have financial assistance from Medicaid.
On top of that, you will have cost-sharing such as deductibles and copays when you use your Medicare benefits. Prepare for this ahead of time by saving money toward your future healthcare expenses.
2. Your Initial Enrollment Period is Important
One of the most popular questions asked by future Medicare beneficiaries is, “When do I need to enroll?”
Your initial enrollment period is specific to your birthday. It begins three months prior to the month that you turn 65 and ends three months after your birthday month. This means your initial enrollment period is a total of seven months.
During this time, you should enroll in Medicare Part A, Part B, and Part D (drug coverage). If you don’t use this time wisely, there is a possibility of late penalties.
It’s also important to know when your coverage will start. If you enroll in the first three months of your initial enrollment period, your Medicare coverage will begin on the first day of your birthday month. Anytime after that, you will have delayed coverage which may result in going a couple of months without any coverage at all.
Another period that usually overlaps with your initial enrollment period is your Medigap Open Enrollment (OE). This is a six-month period that begins on your Part B effective date. You will want to use this time to enroll in a Medigap plan (Medicare supplement).
If you apply for a Medigap plan during this OE window, you won’t have to answer any health questions. Therefore, you won’t be turned down due to health issues.
3. There are Penalties for Late Enrollment
If you don’t have other creditable coverage and you don’t enroll in Part B and Part D during your initial enrollment period, you will be penalized.
For every year you go without having Medicare Part B you gain a penalty of 10% of the standard monthly premium. This penalty is cumulative, and you pay it monthly for as long as you are enrolled in Part B later on.
The penalty for Part D is similar. Even though Part D is voluntary, for every month you go without Medicare Part D you acquire a penalty. The Part D late penalty is equal to 1% of the national average Part D premium. The penalty gets added to the base cost of any Part D plan that you enroll in later on. So, if you go three years without Part D, you will have to pay your normal Part D premium plus a 36% penalty.
It’s important to remember that you only owe these penalties if you didn’t have creditable coverage. The most popular form of creditable coverage is having a group health plan through a large employer.
4. Some People Can Delay Enrollment Without Penalty
If you have group health coverage through your current employer at the time you become eligible for Medicare, you may be able to delay enrollment without incurring the penalty.
You must be actively working for an employer who has twenty or more employees. If you meet this requirement, you can delay enrolling in Medicare until you retire and lose that employer coverage.
However, since Medicare Part A doesn’t cost you anything, many beneficiaries enroll in Part A. This way you will have extra coverage to supplement your group health plan at no out-of-pocket cost to you.
5. The Annual Election Period is NOT for Medigap Plans
One of the biggest misconceptions of Medicare is that the Annual Election Period (AEP) is used for enrolling in Medigap plans without going through underwriting. This is incorrect. The AEP is only for Medicare Advantage plans and Part D drug plans.
The AEP is from October 15th to December 7th each year. During this time frame, you can switch from one Medicare Advantage plan to another or from one Part D drug plan to another. You can change from Original Medicare to a Medicare Advantage plan. You can also switch back to Original Medicare by disenrolling from your Medicare Advantage plan and enrolling in a Part D drug plan.
However, this does give you a free pass into a Medigap plan. Depending on your state, if you decide to apply for a Medigap plan during this time, you will have to answer health questions. The insurance company can approve or decline your application at its own discretion.
6. If Your Doctor Accepts Medicare, They Will Accept Your Medigap Plan
Many doctor office employees don’t know everything about Medicare. That’s not their job. So, it’s normal for them to get confused about how Medicare works and they could misinform you about which plans your doctor accepts.
If you have a Medigap plan, all you need to ask your doctor is, “Do you accept Medicare?” If they say yes, then you can use your Medigap plan there as well.
Don’t ask them if they accept your specific carrier, because they might think you’re asking about a Medicare Advantage plan and say no. (Advantage plans, unlike Medigap plans, have networks).
Your doctor’s office will simply bill Medicare and Medicare will pay its share. Then Medicare will forward the remainder of your bill to your Medigap plan. Your Medigap plan will pay its share.
7. Your Plans May Change Each Year
If you are enrolled in either a Medicare Advantage plan or a Part D drug plan, your benefits can and likely will change each year. Your insurance company can make changes to the plan’s premium, coverage, copays and networks every year.
Be sure to review the Annual Notice of Change letter that you will receive each fall. This letter usually arrives in your mailbox in September or early October and outlines the upcoming changes. If you are unhappy with the changes, you can use the Annual Election Period to change to a different plan. Changes made during this election period will become effective January 1st.
Conclusion
Understanding the complexities of Medicare is important, and I appreciate Danielle helping to educate us on these 7 Things You MUST Know About Medicare. She’ll be monitoring the comments, so please take this opportunity to ask a true expert any questions you have about the specifics of Medicare. Thanks for your guest post, Danielle. You taught me a few things today, and I suspect the same is true for many of our readers. As a reminder, if you’d like more information on Medicare, don’t hesitate to check out the free course from Boomer Benefits here.
Thanks for this Danielle. Clear and concise information. But it will no-doubt change before I reach that age since I’m a long way off so it’s something we’ll all have to keep track of.
Glad you found it of interest Dave, You’re right, Medicare evolves and changes so it pays to keep an eye on it.
Thanks, Danielle. Very helpful. Two questions:
1. My wife is not employed and is covered by my employer’s group health plan. If she enrolls in parts A, B, D, and Medigap at age 65, is there any reason for me to keep her on my employer’s plan? I’m two years younger and may continue working until age 65.
2. In the last paragraph of section 5 above, should you have said, “…this doesn’t give you a free pass?”
Thanks!
(Great topic, Fritz!)
Glad you enjoyed the post, Don! If your wife intends to enroll in Medicare plus Medigap and Part D, you definitely will not need to keep her on the employer plan. If your employer has more than 20 people, that coverage is primary and Medicare becomes secondary, so keeping her on the group plan would make her Medigap plan useless to her. You only need one or the other. 😊
Thanks for the info Danielle.
Retired military have Tricare for Life health insurance. Do we only need to sign up for Part A at age 65 and not pay for Part B? I believe we still are required to pay for Part B, but not sure. Thanks for the chance to ask this. And God bless you and your readers.
Hi Steve,
Medicare is primary for retirees with TFL so it’s very important to enroll in both Medicare Parts A and B. You must have Part B in order to remain eligible for TFL.
This is a post that is needed a lot for people under 65. I feel we are uninformed and not really estimating this part of our future cash flow needs without understanding Medicare better. My experience with it comes from managing my in-laws finances. With that, I have a couple of questions on Medigap:
In part 5 you state “Depending on your state, if you decide to apply for a Medigap plan during this time, you will have to answer health questions.” So just to understand this better, first, does switching plans have to happen during open enrollement. And second, if a person does want to switch (for my in-laws this means they are 88 years old and have several pre-existing conditions), does the insurance company then have the right to turn them down? Does this make it really important to pick carefully which plan you are on when you a younger Medicare recipient and what happens if your plan gets eliminated?
Hi Susan,
Yes, you must have a valid election period in order to switch your Part D drug plan or your Medicare Advantage plan. Most people use the annual election period in the fall to make these changes. For Medigap plans, on the other hand, you can apply to change to a different Medigap company or plan at any time in the future. However, the new Medigap company will require you to answer health questions in most states and you can definitely be turned down for coverage due to pre-existing conditions.
If you have a chronic or serious health condition at the time you enter Medicare, then it’s very important to choose wisely during your one-time Medigap open enrollment window which only lasts for six months, and then it’s gone. If Medicare eliminates a certain plan in the future, the people on that plan are always grandfathered and can keep their coverage, so you will never lose your policy unless you fail to make your regular premium payments.
Thank you for the information. I’m 45 so I think I can put it off for now. I’m sure it’ll change in 20 years, right?
Hi Joe,
no one really knows what the future holds but its highly likely there will be some changes. We’ll always make sure to report and explain changes as they happen.
Thank you for this important information. I’m planning ahead 6 years and need to understand how it works and what it costs. I’ll be watching for updates !
Your welcome Denise, glad it helped. Anything you’re not sure of please ask, happy to help.
Hi,
This is helpful information.
I have a few questions.
My husband is on Medicare but I also carry him on my health insurance so my insurance for him is primary. Is my employer required by law to be the primary coverage for him? In other words, are they able to reject him under their plan as primary if he is Medicare eligible? There seems to be some disagreement about this.
When my husband became Medicare eligible he was employed and his insurance was primary and he was told he did not need to apply for Part B at that time. Now that he is retired and under my insurance and Medicare, is he okay still not being on Part B?
When I retire, and Medicare becomes primary, what information do we need to provide so that he is not given the penalty for Part B?
Lastly, is there any new information about the ongoing use/misuse of Observational Status that you are aware of?
Thank you for the opportunity to ask these questions from an expert.
Whether Medicare is primary or secondary depends on the size of the company. If your husband is 65 or older and your company has more than 20 employees, then the group plan will be primary and Medicare will be secondary. The company cannot force him to leave the employer coverage when you are actively working there. You are entitled to carry him as your dependent. When you retire, the group insurance carrier will send you a letter of creditable coverage showing the dates that he was covered by the plan. You need to keep a copy of this because this proves he is not subject to a penalty for either Parts B or D. Now on the flip side, if your employer has less than 20 employees, then Medicare is primary and your husband would need to have both Part A and B. You can find information about the Hospital Observation status on our website – we published a blog post about this in March: https://boomerbenefits.com/hospital-observation-and-medicare/.
Danielle, I will be retiring at the age of 67, this June 2019. I have coverage with my current employer for the rest of my life and my husband, however i realize (or I think I’m sure of this) that I will still sign up by my June birthday (turning 67) and Medicare will become my first go to for insurance, then United Health Care (PPO) will be my secondary. I also have dental, vision, and pharmacy included in United Health Care. So, can you tell me if I’m accurate on this and anything else that i will need to know by the time i retire in June? Thank you.
Hi Marlene
Yes in most cases that is correct. When an employer offers retiree coverage, Medicare is primary and the group retiree coverage is secondary. It’s getting more and more rare these days to find companies still offering retiree coverage, so I am happy for you to hear that you have not only medical but also routine dental and vision, which Original Medicare doesn’t offer.
I will turn 65 in May, 2019, not employed and covered on my husband’s (large employer) plan. Currently drawing my SS. I plan to stay on his insurance but sign up for Part A Medicare. What exactly do I need to take to the Social Security Office documentation-wise to delay Part B, please?
Hi Donna
It’s your right to decline Part B, so there isn’t really any documentation that you should have to present. You can call them to let them know or if you go down in person, maybe just take your group health member ID card with you, but I doubt they will even ask to see it because no one can force you to take the Part B.
This is one the best posts I’ve seen on Medicare. Thank you! My husband and I will turn 65 next year, so we are absorbing as much info as possible. Hubby is a retired State employee who is eligible for their retiree Medigap and Medicare Advantage plans. However, the monthly premium for Plan G is noticeably higher than if we bought the same plan from the carrier (Blue Cross Blue Shield). As I understand it, the State Retiree plan premium is the same whether you are age 65, 75, 85, etc. So we may be paying more now, but less later (relative to an age-rated Medigap Plan). And, the State Plan offers an annual Open Enrollment for retirees.
My thought is to choose the State Retiree Medigap benefit (even though the cost might be higher now) in order to have the no-penalty/no medical-underwriting ability to change plans in the future. Once we leave the State plan, there’s no going back. Your thoughts?
I think that sounds like a good strategy, Mary. Does your state retiree plan also include drug coverage that goes alongside it?
If so, that may be why it costs more.
Thanks for your response, Danielle. We can get the Medigap Plan with or without Part D. But even without the drug plan, the premium is still noticeably higher. I believe it must be because no matter what your age, all Retirees pay the same.
I had another thought after reading all these posts. If we stay with the State Retiree plan, I could even enroll in a less expensive Medicare Advantage plan at first (while I’m healthy and have no medical issues). Then switch at Open Enrollment to a richer plan later on in life when/if health costs become an issue. Having the State annual Open Enrollment really provides a lot of flexibility.
Definitely do not enroll in a Medicare Advantage plan because retiree plans won’t coordinate with those. You need to be in Original Medicare Parts A and B as your primary coverage in order for your state plan to pay secondary.
However, if the state coverage is exactly the same as regular Plan G, there may be no benefit for you paying more to stay there. A regular Plan G on the private market is excellent coverage with only the Part B deductible to pay. It’s up to you but if you stay with the state plan and see that the rate continues to go up, you’ll at least know that you have similar great options in the private market.
One thing many folks don’t realize is that you can’t sign up for medicare until you are 65. I see people retire at 60 with concerns about health care until medicare kicks in. Many people can’t afford the health insurance, so they continue to work until 65.
Hi –
Someone asked about this above, but didn’t get an answer – I too think there’s an important omission in this sentence in #5:
“However, this does [NOT] give you a free pass into a Medigap plan.”
Otherwise the paragraph is confusing. Thanks!
It’s good to know that if a doctor accepts medicare, they can usually accept Medigap plans as well. You mentioned in situations like this Medicare will forward the remainder of the bill to your Medigap plan. I’m interested to learn if the amount they can pay is dependent on the kind of plan you have.
Thanks for explaining that the initial enrollment period lasts for six months surrounding your 65th birthday. My mother-in-law is in her sixties, so I’ve been doing some research online to figure out when she should enroll in Medicare. I wasn’t sure when the enrollment period would start for her, so I appreciate you sharing that information here.
Thank you for a very helpful article. But still I am not sure about something; need clarification.
I will be turning 65 this year. My wife, younger, still works for a large company (20+ employees). Currently I am self-employed and on her insurance. And I plan to stay on her insurance after I turn 65.
1. I understand that I must sign up for Medicare (even though will continue being on her insurance). Correct?
2. Do I have to sign up for Part B and Part D or I can skip them?
Thank you in advance for your reply.
Dmitry, since the employer has more than 20 employees, you can enroll in Part A and delay Parts B and D until you retire. You will have a Special Enrollment Period to add Parts B and D without penalty when you retire.
The only exception would be if you are contributing to a health savings account. If you are doing that and plan to continue contributing, then you would not enroll in Part A or SS income benefits either.
Danielle,
Thank you very much for your reply.
You mentioned that our plans may change every year. It makes sense that your insurance company would make changes to the premium, coverage, copays, and networks every year as you said. My husband and I wanted to get Medicare, but after reading this I realized that I have no idea where to start. I think that I am going to look for a Medicare agent in our area to help us out with this process.
Kate, yes there is a lot to learn about Medicare. You might consider attending one of our New to Medicare webinars – we offer them free to charge and you can sign up at our website. Or if you prefer, just call our office at 817-249-8600 and our receptionist can transfer you to one of my team who is licensed in your state.
Hi Danielle, My husband becomes eligible for Medicare this August. I am quitting my job in August as well and so he will have coverage to the end of the month. So I am thinking of enrolling him for Medicare starting September. Just checking to make sure this won’t be a problem. Thanks for your advice!!
My husband will retire in March of 2020 and I am on his health care plan. He can stay on the plan until he turns 65 and then I will have to do a life event and I can stay on his plan for another 18 months.
I will be 64 and 2 months at that time and will have to get my own plan on the market then.
My question is what is the income limit for the different tiers of the Medicare costs for plan B and D.
Do they just look at his income for the costs or do they look at our joint filing income.
We want to keep converting money from IRA’s to Roths before RMD’s without having to pay more taxes.