When you start to consider Medicare, chances are that you will be overly marketed to and inundated with information about the different products and plans available to you. This can lead to confusion and even delay your process. When you are considering enrolling in Medicare you really only need to answer 4 questions.
# 1 Original Medicare or Medicare Advantage?
These are 2 distinct paths that you must decide between.
Under Original Medicare you receive Parts A & B. You can also add Part D for drugs and a Medicare Supplement policy to fill in most of the out of pocket expenses. Choosing this option will give you freedom to choose any doctor or hospital that accepts Medicare. This path has less out of pocket for deductibles and copays but has a higher premium.
If you select Medicare Advantage then you will get all coverages (A, B & D) through one company. You will generally have a lower premium, but you will also generally have a higher out of pocket cost and a network of approved doctors and hospitals. The Medicare Advantage Prescription Drug plans take the place of Original Medicare. As a result, the Medicare Advantage Prescription Drug plan is your primary insurance.
So, your first decision is which path to choose.
# 2 Should I sign up for Part B?
Part B covers doctor and outpatient services. Normally you will sign up when turning age 65. You can enroll from October 15 through December 7th for coverage to begin effective January 1. If you have “creditable” insurance, then you can delay signing up for Part B.
Generally, you must be on a group or health plan that is considered creditable insurance. You must be getting coverage and actively working or getting coverage through a working spouse in order to have a valid waiver for Part B. You should sign up for Medicare Part B when you have coverage from a group of less than 20, but you do not have to. You will still have a valid part B election period and will not pay a penalty if you are actively working and on a group plan of less than 20. The issue is that someone actively working and on a group of less than 20 may get claims denied because with groups less than 20 Medicare is primary. As a result, you need to have Medicare A and B. The group insurance plan could potentially deny 80% of your medical claim if you are age 65 or older on a plan with less than 20 employees. Also note that COBRA does not count as creditable insurance.
If you delay taking Part B because you had creditable insurance, then you have an 8-month period to enroll. If you miss the 8-month special enrollment period for part B, then the only other time to get part B is during the Part B general election period which runs from Jan 1 through March 31 every year for a July 1 start date.
If you don’t sign up for Part B during your initial enrollment and you don’t have creditable insurance, then there is a 10% penalty for each 12-month period you delay signing up that you will pay for the rest of your life.
#3 Should I sign up for Part D Drug Coverage?
The open enrollment period for Part D is a 6-month period when you turn age 65 and you are also enrolled in Medicare Part A. You only need to be enrolled in Part A to get Part D coverage.
If you choose Original Medicare, then you can add Part D to it. If you choose Medicare Advantage, then generally these plans include drug coverage. There is a 1% penalty of base premium for each month uncovered if you do not sign up for Part D when you are first eligible.
# 4 Do I need a Medicare Supplement Policy?
Medigap & Medicare Supplement policies are the same thing. Medigap policies fill in most of the deductibles, copays, and cost share of Original Medicare. Medigap policies can only be purchased in conjunction with Original Medicare. If you have Medicare Advantage, then you are not eligible for a Medigap policy.
Medigap policies are standardized in most states. So, if you get Plan G from one company, another company that offers Plan G would have the exact same benefits. Medigap policies are designed to specifically fill in the gaps of Medicare. All Medical bills will first be sent to Medicare. If Medicare does not cover a claim, then the Medigap policy also will not cover the medical bill. With Medigap policies you typically have a little bit more premium than a Medicare Advantage Plan, but you have much lower out of pocket costs.
We will walk you through the different Medigap plans available to you in a separate post so stay tuned.
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