Just before you turn 65 is typically when you can enroll in Medicare, the federal health care insurance program. However, be forewarned that the rules, options and penalties for how and when you sign up for the program are fairly complicated, and many seniors make mistakes that cost them.
Money Talks News’s recent article entitled “4 Pitfalls for First-Time Medicare Enrollees” describes some of the pitfalls one might experience, if you don’t sign up correctly at the start.
- You fail to enroll in your Initial Enrollment Period. You generally become eligible for Medicare when you turn 65. However, failing to enroll on time can result in permanent financial penalties, or it can delay your benefits. Medicare gives you a seven-month Initial Enrollment Period, which includes the month you turn 65, the three months before and the three months after. If you miss that timeframe, you’ll have to wait to apply during the annual general enrollment period that runs from January 1 to March 31. Your coverage won’t begin until July 1 of that year, and you may have to pay a higher Part A and/or Part B premium for late enrollment. If you’re already getting Social Security when you turn 65, you’ll get Medicare automatically, so there’s no need to sign up. They’ll reach out to you.
- You must pay extra for signing up late. If you miss your Initial Enrollment Period and don’t have other qualifying medical coverage, like employer insurance, there will be penalties. The amount is based on how long you waited and which part of Medicare is at issue.
- You mix up Original Medicare with Medicare Advantage. These are the two primary types of Medicare. Original Medicare is traditional Medicare. It’s offered directly through the federal government and generally includes Parts A and B. There are also two types of optional add-on coverage for seniors with Original Medicare:
- Part D (prescription drug coverage)
- Medigap (supplemental insurance coverage for costs that Original Medicare doesn’t cover)
With Original Medicare, you don’t have to select a primary care doctor and generally don’t need a referral to see a specialist. However, there’s no yearly limits on what you’ll pay out of pocket. Medicare Advantage is all-in-one coverage offered by private health insurance companies that are approved by the federal government program. Medicare Advantage plans include Parts A, B and usually D. Medicare Advantage plans are required to follow rules set by the federal Medicare program and must cover all of the same services that Original Medicare covers. However, note that the rules can change annually, and Medicare Advantage plans are allowed to cover additional services. Therefore, coverage and costs can vary widely from one Medicare Advantage plan to another.
- You lose your Medigap policy. There’s an important risk to consider, if you use Original Medicare with a Medigap supplemental policy. If you switch to a Medicare Advantage plan from Original Medicare, you can drop your supplemental insurance. However, you are only guaranteed coverage by Medigap plans in your area during an initial Medigap enrollment period. Then and only then are insurance companies forbidden from denying you coverage or charging you more money because of pre-existing conditions. Therefore, depending on your health and where you live, if you lose your initial Medigap coverage, you could wind up paying a lot more for a Medigap plan later. You could also be excluded from some plans.
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Reference: Money Talks News (Oct. 8, 2020) “4 Pitfalls for First-Time Medicare Enrollees”
Suggested Key Terms: Elder Law Attorney, Medicare, Elder Care