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.
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.
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.