Happy 65th birthday – now you’re eligible for Medicare – sounds like something you might read on a humorous birthday card. Most people think there’s nothing funny about turning 65. Sure, you can take advantage of the senior discounts, but getting old wasn’t something you were in a mad rush to be when you turned 18 or 21, just so you could get that 10 percent off your breakfast. Unfortunately, it’s a fact of life and health insurance is no joking matter.
In reality, for some, enrolling in Medicare can be an overwhelming task. Not only is the terminology confusing, but the options even more so…and, the last thing you want to do is make a mistake selecting your plan. Don’t be surprised if your mail box is packed with letters and information packets from various insurance carriers six months ahead of your birthday – data brokers have your name and birth date, and they’ve shared the information freely with insurers.
Make no mistake about it; Medicare is complicated, but the time to deal with it is when you turn 65. Unless you’re already drawing Social Security, don’t expect the federal government to automatically enroll you – it’s not going to happen – it’s your responsibility. And, the enrollment period is very tight, restricting signups to only run from the three months prior to your birthday to three months after you turn 65. Worst case scenario if you miss it is you’ll be penalized – unless you have health insurance through your job or your spouse’s job at the time of your 65th birthday.
A good place to start if you have questions – and, you will have some – is Medicare’s own Medicare.gov website or calling 1-800-Medicare. Beyond that, unless you’re familiar with how Medicare is structured and you understand the terminology, you may not be able to make the right decisions about what you’re buying. Below are some terms you’ll probably run across:
• Plan A – of traditional Medicare covers inpatient hospital services, skilled nursing home care and hospice, among other things.
• Plan B – of traditional Medicare helps cover preventive care and physician and outpatient services, among other things.
• Plan D – plans are private insurance plans covering prescription drug costs.
• Medicare Advantage – is an alternative to traditional Medicare. In this program, private insurance plans are paid by the federal government to provide coverage that is equivalent to original Medicare.
If you’re still confused, you’re not alone. But, one thing important to note is – failing to sign up on time can be costly. Don’t make the mistake of thinking Medicare is free – it’s not. There’s an annual deductible ($147 in 2014 for Part B) and monthly premium payments that range from $104.90 to $335.70 for individuals. The exact amount you’ll pay depends on your tax returns from two years prior.
Should you not sign up during the initial enrollment period or as soon as your job-based insurance expires, you’ll get stuck with a penalty that will raise your premiums for Medicare Parts B and D for the rest of your life. Furthermore, your monthly premium rises by 10 percent every year you delay signing up for Part B. Simply missing the deadline by a month will be considered a one-year delay.
But, it doesn’t stop there, because there’s also a waiting period before your coverage goes into effect, which means you could be without insurance for several months, maybe even as long as a year. The penalty for Part D is 1 percent for every month you delay. When tallied, a year’s delay would add 12 percent to the monthly drug premium base, now set at $32.42.
Although you may not take turning 65 seriously, there’s very little doubt signing up for Medicare in the allotted enrollment period is serious business.
Something else you should take seriously if you’re still years away from 65 – is that you’re getting the best rate on your health insurance. Why not get a free health insurance quote today?