Transitioning to Medicare can be intimidating, whether you’re changing insurance plans for the first time in decades or a savvy shopper who peruses the Marketplace for coverage every November. The good news is that enrolling in Medicare is easier than you think. Watch out for these three common Medicare enrollment mistakes, and you’ll find that signing up for Medicare coverage can be smooth sailing.
Mistake #1: Not signing up when you’re first eligible
Your window to enroll in Medicare is seven months; it begins three months before the month you turn 65, includes your birthday month, and extends to the end of the third full month after your birthday month. If you begin collecting Social Security at age 65, you’ll be automatically enrolled in Parts A and Part B (sometimes called Original Medicare). If you continue working past your 65th birthday and don’t start collecting Social Security, you’ll need to initiate your enrollment yourself.
- If you are retiring at age 65: You should sign up for both Medicare Parts A and B and explore your options for adding additional coverage beyond the limited coverage provided by Original Medicare. This is true even if you elect COBRA or qualify for retiree coverage, so don’t delay! There are hefty penalties for late enrollment, and if you miss your Initial Enrollment Period you may need to wait to sign up for Parts A and B until the General Enrollment Period between January 1–March 31, leaving you with possible gaps in coverage.
- If you will continue working past 65 for an employer with fewer than 20 employees: You should still enroll in Medicare Part A and will probably need to sign up for Part B, too. Speak with your employer’s benefits administrator to find out whether you can delay enrolling in Part B and explore your options for adding additional coverage beyond Original Medicare.
- If you will continue working past 65 for an employer with more than 20 employees: You don’t need to sign up for Medicare yet, if you want to maintain your employer-provided coverage. Heads up, though: once you retire, you’ll need to sign up within eight months of retirement or face penalties and coverage gaps.
Mistake #2: Not signing up for additional coverage
Original Medicare makes a big dent in health care costs for seniors, but it doesn’t cover everything. For one thing, prescription drug coverage (also called Part D) is not included in Parts A and B. Signing up for prescription drug coverage is technically optional under Medicare. If you don’t sign up when you’re first eligible (that is, when you first turn 65 or retire), you may face exorbitant out-of-pocket drug costs. If you elect prescription drug coverage after the date of eligibility, you’ll be subject to penalties.
Original Medicare also requires that you pay coinsurance for all of your medical expenses. Coinsurance is a fee calculated based on the costs of your care. Most people will be responsible for 20 percent of the costs of their care if they enroll in just Original Medicare and a prescription drug plan (PDP). That can add up, especially if you’re on a fixed income. Luckily, you have options for additional coverage.
- Prescription drug plans (PDPs): These plans are standalone add-ons that will provide coverage for prescription drugs. It’s a good idea to sign up for one as soon as you are eligible to avoid paying penalties or suffering a gap in coverage. Plan premiums and other out of pocket costs will vary, so you should compare your options and choose one that’s right for you. Always make sure to check the plan’s formulary to ensure that the medications you currently use are covered.
- Medicare Supplement (Medigap) plans: Medigap plans are also designed as add-ons to your Original Medicare coverage; they fit Original Medicare like a key in a lock, covering only what isn’t included in Parts A and B. Medigap plans don’t include Part D coverage, so you’ll have to choose both a PDP and a Medigap plan if you need drug coverage. In most cases, you’ll still need to pay your Part B premium, but your other out-of-pocket costs will be reduced. Medigap plans can bring your out-of-pocket costs for certain services down to zero.
- Medicare Advantage (MA or Part C) plans: MA plans are a different route to access Medicare benefits. MA plans are provided by private insurers on behalf of the Medicare program. MA plans provide all of the benefits included under Parts A and B, plus additional coverage. For example, some MA plans bundle in Part D coverage, so drugs are included. You may still owe coinsurance or copays if electing an MA plan, and you’ll need to pay your Part B premium. There are many different plans to choose from. Some even have $0 premiums and attractive perks like coverage for additional chiropractic and podiatric visits or free fitness memberships.
Mistake #3: Not realizing you may qualify for help to lower your costs
Paying for all of this may seem daunting, but there are many cost-effective plans available at different price points to help you choose varying levels of coverage. A knowledgeable, licensed insurance agent can help you compare Medicare plan costs, which are measured by premiums and anticipated deductibles and copays. If you have trouble budgeting for your care, you may qualify for state or federal assistance. Don’t be afraid to ask about these programs! Lower costs may be available.
- Medicaid: This state-run program provides very inexpensive health insurance for people living on extremely low incomes. Older adults who are Medicare-eligible and qualify for Medicaid may use Medicaid as their secondary insurance, meaning that it will be applied to costs that remain after Medicare has paid the first 80 percent of expenses. Depending on state regulations Medicaid may also cover certain services that Medicare doesn’t provide.
- Medicare Savings Programs (MSPs): States operate MSPs to help cover the Part B premiums and sometimes other expenses for low-income individuals. Income limits vary by state.
- Extra Help: This federal program provides low-cost or reduced Part D coverage for people whose combined income and assets fall below a certain level.
Your State Health Insurance Assistance Program (SHIP) provides free counseling about Medicare and Medicaid. If you think that affording your health care under Medicare will be a struggle, reach out for assistance, or contact a licensed agent for more information about how to access the coverage you need at a price that works for you.
Y0041_HM_19_73191 Accepted 5/13/2019
Website last updated: 3/19/2019