When to Sign Up
Everyone is eligible for Medicare at age 65, even if your normal retirement age for full Social Security benefits is later. To avoid possible mishaps, contact the Social Security Administration (800-772-1213; www.socialsecurity.gov) three months before you turn 65 to sign up. The initial enrollment period for Medicare runs for seven months, starting three months before your birthday month and continuing for three afterward.
If you miss your initial enrollment period for Medicare Part B, you’ll have to wait until the next general enrollment period, which runs from Jan.1 to March 31 for benefits beginning the following July 1. You’ll also incur a 10 percent penalty for each year you wait beyond your initial enrollment period, which will be tacked on to your monthly Part B premium. You can sign up for premium-free Part A, which covers hospital services, at any time with no penalty.
Working Seniors
Special rules apply if you’re eligible for Medicare and still on the job. If you have health insurance coverage through your employer or your spouse’s employer, you have a “special enrollment period” in which you can sign up. This means that you can delay enrolling in Medicare Part B, and are not subject to the 10 percent late-enrollment penalty as long as you sign up for within eight months of losing that coverage. Similarly, if you have employer-provided prescription drug coverage (that’s credible), you can avoid the late enrollment penalty for Part D (a 1 percent premium hike every month you delay) if you sign up within two months of losing the coverage.
All-In-One Plans
Are you aware that Medicare also offers a comprehensive health plan sold by private insurers called Medicare Advantage? These plans provide health care, prescription drug coverage and additional services all in one policy, and thanks to generous government subsidies, these plans are better, cheaper and more readily available than ever before. A concern many people have had with Medicare’s private plans over the years is the managed care (HMO) factor, which limits the doctors and hospitals you can use. But the newer private fee-for-service plans allow you to use doctors and hospitals outside your network, usually at an additional cost. Some of these plans charge nothing beyond the cost of the Medicare Part B premium, which is $93.50 a month in 2007.
By contrast, if you opt for traditional Medicare (Part A and B), you’ll need two additional insurance policies – supplemental medigap insurance and a Part D prescription-drug plan – to get the same level of coverage as a Medicare Advantage plan. And Advantage plans on average are cheaper than what you would pay for traditional Medicare, a medigap policy, and a stand alone Part D prescription drug plan. To find and compare Medicare Advantage plans visit www.medicare.gov/mppf.
Fill the Gaps
If you choose traditional Medicare, it’s a good idea to get a medigap policy (sold by private insurance companies) to fill in the gaps that basic Medicare doesn’t cover. Policies come in 12 standardized versions, labeled A through L, and cost on average about $140 per month. You can compare these policies at www.medicare.gov/mppf. As long as you buy a policy within six months of signing up for Medicare, you can qualify for any plan regardless of your health. If you already have a medigap policy, you can shop around to find a lower cost plan. But don’t cancel your old policy until you know you qualify for a new one because you could be denied coverage for medical reasons after the initial sign-up period.
Drug Coverage
Along with the traditional Medicare coverage and a medigap policy, you also need to buy a Medicare Part D prescription drug plan – if you want drug coverage. There are tons of options offering a wide range of coverage (premium costs average $24 per month) so choosing can be difficult. You can compare drug plans at www.medicare.gov/mpdpf. Prices and coverage change yearly so even if you already have a Part D plan, it’s a good idea to review your options during the open-enrollment period every year (Nov.15 to Dec. 31), when you can switch policies.
Note: Seniors with limited income and resources may be eligible for extra financial help paying for their out-of-pocket Medicare Part D prescription drug costs. Contact Social Security at 800-772-1213 to find out if you’re eligible.
Savvy Tips: For more information, see the 2008 “Medicare & You” handbook which is mailed out in October to all beneficiaries and those approaching age 65. You can also get free Medicare counseling from your State Health Insurance Assistance Program (SHIP). Call 800-633-4227 or visit www.shiptalk.org to find a local counselor.
