If you’re nearing age 65 (or retiring and losing group insurance) you may need help with Medicare planning. It’s always best to get started early so that you fully understand all of your options. Choices you make now will affect your options in the future.
We help our clients through this progression. There is a natural order to Medicare enrollment and in this article, we will walk you through it step by step. We’ll help eliminate the confusion so you’re Medicare ready day one.
The first step in Medicare planning is enrolling in Medicare Parts A & B. Most people are entitled to Part A automatically when turning age 65 because of work credits. Nothing usually needs to be done here. Medicare will mail out your red, white and blue card showing your Part A effective date as the first of the month when you turn age 65.
Medicare Part B is the gatekeeper, however. This is the one that requires your careful attention. Not everyone is automatically enrolled (or entitled to Part B) at age 65. In fact, some people defer Part B enrollment until they retire some months or years after turning 65. But it’s the part of the puzzle that allows you to move to the next step, so you’ll want to make sure you’re on top of it.
Failing to enroll in Medicare Part B when you are required can lead to enrollment delays and/or late enrollment penalties. These penalties can increase your Part B premiums (what you pay to the government) for your lifetime. It’s very important to get this enrollment timed correctly.
You’ll only want to defer Part B enrollment if you have creditable coverage elsewhere; maybe through your employer. If this is not the case and you’re turning 65, you need to start the enrollment process. There are several ways to enroll in Medicare Part B:
There are thousands of people turning 65 every day. The representatives at Medicare are usually pretty good at telling you how & when to enroll. Whether you defer Social Security beyond age 65 will also determine your path forward. If you are electing SS payments, then you may want to make an appointment at your local SSA office. Your Part B premiums will be deducted from your SS check when you begin payments.
If you are deferring Social Security beyond age 65, then you can try options 1 or 2 as they are more convenient. In this case, Medicare will bill you quarterly for your Part B amounts. Make sure you keep track of and pay those bills. We’ve seen cases where some people missed their Part B payments and that led to a coverage gap and a lifetime penalty.
Okay, so your Medicare Parts A and B are in the works – or finalized. What now? The next step in Medicare planning is deciding how best to supplement your coverage. You are now in your Open Enrollment window. This period of time lasts approximately 7 months. It includes the 3 months prior to your Part B effective date, the month of, and the three months following. The world is your oyster.
During your specific, one-time Open Enrollment window, you can purchase any Medicare Supplement, Part D or Advantage plan you want. It’s wise to explore all of your options. What you choose now can limit your choices down the road. Again, you usually only get one shot at this – and if your window expires and you’ve done nothing – you can face medical underwriting, insurance declines, late enrollment penalties and coverage delays.
There are several gaps in Medicare and to go it alone with only A & B will expose you to significant out of pocket costs. So you’re next decision is deciding whether you are a Medicare supplement or Medicare Advantage person. You cannot have both. Each has their own pros and cons. We compare Supplements to Advantage plans here if you would like some background.
This is a good time to speak with an independent agent, your friends & family, and also gather information online. There is not necessarily a right or wrong way to fill the gaps in your Medicare coverage. Once you’ve done your research and talked with those who understand both Supplements and Advantage plans well, your decision won’t be too difficult. Just remember, you cannot have both. It’s one or the other. And make sure to ask you agent about how your choice now will affect your options later.
If you’ve chosen a Medicare supplement plan over an Advantage plan, it’s wise to purchase a stand-alone Part D drug plan as well. (Most, but not all, Medicare Advantage plans include Part D drug coverage – so you don’t need to buy one separately. Advantage plans that do not include Part D coverage usually won’t allow you to buy a stand-alone drug plan without cancelling-out your Advantage coverage. Advantage plans without a Part D element are usually appropriate for veterans and those who have creditable drug coverage elsewhere. This is another good time to talk with your agent so that you don’t accidentally cancel any coverage you want.)
Failing to purchase a Part D drug plan during your Open Enrollment window will likely lead to delays and penalties when you do want to enroll. Medicare assesses a 1% penalty for each month that you were required to own a drug plan and did not. This Late Enrollment Penalty (LEP) accumulates over time and results in increased premiums for life. Even if you don’t have need for a Part D rx plan, it can be wise to buy the cheapest placeholder available simply yo avoid the penalty.
In a nutshell: If you choose a Medicare supplement, you may also want to purchase a stand-alone Part D drug plan as the two (by rule) are sold separately. If you purchase a Medicare Advantage plan, then chances are it already includes a drug plan and nothing more needs to be done. Any knowledgeable agent can walk you through this process quickly and easily so that you are compliant.
We get these questions a lot. The answer is government run Medicare does not cover much in the way of dental, vision or long term care. If you want this insurance, then you will need to pay separately in most cases. Medicare only goes so far.
It’s important to note that some Medicare Advantage plans include basic dental, vision and hearing. Others offer more robust coverage at an additional cost. Conversely, Medicare supplement plans do not offer any ancillary coverage – basic or otherwise. It will need to be purchased separately if you choose a Medigap plan like F, G, or N.
And no combination of Medicare, Supplement and/or Advantage plan covers much in the way of long term care. The most you can hope for is 100 days of skilled care coverage. If you need the more common types of care (custodial and intermediate) then you won’t even be afforded 100 days.
Our clients who are concerned about estate protection will usually turn to a long term care insurance policy. Fortunately, there are several options to address these costs. There are traditional LTCi policies, hybrid LTC annuities and life insurance, short term care plans, hospital indemnity insurance as well as cancer, stroke and heart attack policies. One size does not fit all in such a broad category – so we help our clients find the options that suit them best.
When you are Medicare planning and enrolling, you’re just marching down the cafeteria line. You get your meat and potatoes (Medicare A & B) from the government and then your vegetables and dessert (supplemental & Part D insurance) from a broker. We’re happy to guide you through all phases so you find the insurance plans that best meet your needs and budget.
Ready to get started? Contact us today!
Category: Medicare Supplements, Retirement Planning