Thinking Ahead; A Timeline for Medicare Enrollment

Thinking Ahead
A Timeline for Medicare Enrollment

by Ardis Black, JD

As you begin to think about turning 65, you might also begin to think about enrolling in Medicare. At https://www.medicare.gov/ you will find a wealth of information, including where to get help for Medicare decisions near your home. Below are critical dates to keep on your radar, so to speak, some basics that will be helpful to understand, and some important resources to note.

SIX MONTHS BEFORE APPLYING FOR MEDICARE: If you have a Health Savings Account

Part A coverage goes back (retroactively) 6 months from when you sign up (but no earlier than the first month you are eligible for Medicare.

In general, if you are employed and have employer-sponsored health care coverage, you should likely enroll in Medicare Part A at age 65, even if you delay enrolling in Part B until later -- unless you are actively saving into a Health Savings Account (HSA). 

Tax rules prohibit contributions to an HSA if you are enrolled in Medicare Part A. In fact, to avoid a tax penalty, you should stop contributing to your Health Savings Account (HSA) at least 6 months before you apply for Medicare Part A.

THREE MONTHS BEFORE TURNING 65: Employed, or Retired?

One of the first issues to consider is whether you will be employed and receiving health care benefits from your employer on your 65^th birthday. 

• If you will be employed at age 65 and continue health care coverage through your employer, you must contact Medicare 3 months before you turn 65 to verify that your employer’s health care plan meets Medicare’s criteria. (See also: Initial Enrollment Period, IEP, and Separate Enrollment Period, or SEP.)
• If your employer offers a Health Savings Account, be aware that enrolling in Medicare Part A will make you ineligible for Health Savings Account contributions. To avoid tax penalties, you should stop contributing to your HSA at least 6 months before you apply for Medicare.
• If you are drawing Social Security at the time you turn 65, you will be automatically enrolled in Medicare.
• If you plan to retire at or before age 65 but will not be drawing Social Security benefits until later, you must similarly contact Medicare three months before turning age 65 to apply for benefits.

The Initial Enrollment Period (IEP) is the seven-month window that opens 3 months before your 65^th birthday and remains open through your birthday month and the three months following that month.  If you enroll during the three months prior to your 65^th birthday, coverage starts on the first day of your birthday month. If you do not enroll during the IEP and are not eligible for a Separate Enrollment Period (SEP), you will face lifelong penalties and a delay in being able to apply to get medical coverage.

ONCE YOUR EMPLOYMENT (AND EMPLOYER HEALTH CARE COVERAGE) ENDS

If you are eligible, an eight-month Separate Enrollment Period (SEP) to sign up for Medicare Part A and/or Part B starts the month after your employment coverage ends.

A SEP may be granted to those who are employed and covered by eligible employer health coverage during their IEP; however, don’t just assume you will be eligible for the SEP, contact Medicare to verify your employer-provided health insurance meets Medicare requirements. https://www.medicare.gov/forms-help-resources/contact-medicare .

• After the effective date of Medicare Part B, there is a six-month open-enrollment period for Medigap policies, private insurance policies designed to cover all or part of the deductible or co-insurance amounts not covered by the Original (fee-for-service) Medicare Plan.  Such plans may also cover things not covered by Original Medicare.
• If you don’t enroll when you’re first eligible, you may have to pay a Part B late enrollment penalty, and you may have a gap in coverage if you decide you want Part B later.

Once your employer-provided coverage ends:

• You may be able to get COBRA coverage, which continues your health insurance through the employer's plan (in most cases for only 18 months) and probably at a higher cost to you.
• You have 8 months to sign up for Part B without a penalty, whether or not you choose COBRA.
  • To sign up for Part B while you're employed or during the 8 months after employment ends, complete an  Application for Enrollment in Part B (CMS-40B) and a Request for Employment Information (CMS-L564).
  • If you choose COBRA, don't wait until your COBRA ends to enroll in Part B. If you don't enroll in Part B during the 8 months after the employment ends:
    • You may have to pay a penalty for as long as you have Part B. 
    • You won't be able to enroll until January 1–March 31, and you'll have to wait until July 1 of that year before your coverage begins. This may cause a gap in health care coverage.
• Your COBRA will probably end If you already have COBRA coverage when you enroll in Medicare. If you become eligible for COBRA coverage after you're already enrolled in Medicare, you must be allowed to take the COBRA coverage. It will always be secondary to Medicare unless you have End-Stage Renal Disease (ESRD). Learn more about how Medicare works with other insurance.

CHOOSING BETWEEN TWO PROGRAMS: MEDICARE ORIGINAL AND MEDICARE ADVANTAGE

Medicare Original

• Includes Part A (Hospital Insurance) and Part B (Medical Insurance)
• Pros
  • You have more choices for doctors and hospitals. 
  • You don’t have to worry about your plan shutting down or leaving town.
  • You don’t need referrals for specialists.
  • Premiums are set by the federal government, not a private company.
  • Coverage is not limited to your local region.
• Cons
  • Monthly premiums can be higher than Part C if you need a Medigap plan.
  • If you have serious medical conditions, your out-of-pocket costs could be higher (there is no out-of-pocket spending limit). 
  • Separate plans to cover drug costs and other health expenses can add complexity to your health care arrangements.

Medicare Advantage, also known as Part C, is coverage provided through an HMO, PPO, or PSO under contract with the Medicare program.

• Pros
  • A combined plan, Part C plans provide all hospital and medical benefits covered by Medicare. With most Part C plans, there is no need to get separate drug or supplemental policies.
  • In some cases, the Part C plan provides coverage beyond what Medicare covers, such as dental care, hearing aids and eyeglasses.
  • Plans typically have lower cost sharing than original Medicare.
  • A primary care physician’s team may coordinate your overall health care needs.
• Cons
  • You’re likely to pay more for going to doctors or health care centers out of network.
  • You may need referrals to see specialists.
  • If your plan leaves the area or shuts down you will have to choose new coverage.
  • Some plans charge a premium greater than the standard Part B premium.
  • Plans are difficult to compare because of differences between them.

Medicare Part D, Medicare’s Prescription Drug Coverage

• Added to Medicare in 2006, Part D covers outpatient prescription drugs.
• These plans are typically used together with original Medicare; Medicare Advantage plans usually cover prescription drugs.
• Plans may have a monthly premium, annual deductible, copays (flat fee per prescription) or coinsurance (percentage of the cost of the drug.)
• Part D has four payment “stages”: https://www.ncoa.org/resources/medicare-part-d-cost-sharing-chart/
  • Deductible.  You pay a deductible of $445 in 2021 (before insurance pays anything) then move into the next stage.
  • Initial coverage. In this stage the individual pays 25% of the plan cost for drugs up to $1,032.50, the Plan pays up to $3,097.50 for a combined total of $4,130 (2021) before entering next stage.
  • True Out-Of-Pocket (TrOOP) is the coverage gap, previously called the “donut hole” because individuals paid 100% in this stage. Beginning in 2020, individuals now pay 25% of each drug’s cost (generic and brand) in this stage until the total cost reaches $5,183.75. https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/costs-in-the-coverage-gap
  • Catastrophic. When the individual enrollee’s total out of pocket costs reaches $6,550, they enter the catastrophic phase in which they pay the greater of 5% of coinsurance or co-pay costs ($3.70 generic, $9.70 brand.)

Annual Open Enrollment. 

• Changing Provider or Coverage Plan.  Every fall you can change your supplemental insurance provider/coverage plan during the open enrollment period. In 2021 open enrollment is October 15^th through December 7^th. You can search for and compare plans at www.medicare.gov , or consult with a health care insurance broker who can help find a best fit plan for you.
• Switching from Medicare Advantage to original Medicare. From January 1 to March 31 every year you can change from Medicare Advantage to original Medicare; however, to change from original Medicare to Medicare Advantage, you must file a disenrollment form with Social Security Administration or call 1800 Medicare to disenroll by phone. Switching between Medicare programs can permanently affect your options for plan coverage; strongly consider getting assistance before attempting to switch Medicare programs on your own.
   

ADDITIONAL RESOURCES

Minnesota:  Senior LinkAge https://www.seniorlinkageline.com/

Georgia: Georgia Cares https://www.mygeorgiacares.org/

New Hampshire: Service Link Aging and Disability Resource Center https://www.servicelink.nh.gov/

Wisconsin: State Health Insurance Program https://www.shiptacenter.org/about-medicare/regional-ship-location/wisconsin

Medicare Part A, Hospital, is premium free for those who have paid Medicare tax and are eligible for Social Security or Railroad Retirement income benefits.

If your employer has more than 20 employees, and you have group health plan coverage (as defined by the IRS) you may be able to delay Part A and Part B while avoiding a lifetime late enrollment penalty if you enroll later.

The size of the employer and type of plan determines whether you may be able to delay Part A and Part B without having to pay a penalty if you enroll later.

Drugs administered at an outpatient facility, such as chemotherapy, dialysis, or other medicines that are injected or given intravenously are covered by Part B, not D.