The best time to prepare for Medicare enrollment is at least six months before your 65th birthday. This is because there are numerous options, and each has advantages and disadvantages.
The Initial Enrollment Period (IEP) established by the Centers for Medicare and Medicaid Services (CMS) begins three months before your 65th birthday – with a three month “grace period” after your 65th birthday.
If you have not enrolled initially in Medicare within this time period, a financial penalty is nearly always applied to your Medicare health insurance premium cost.
The following describes the main differences between Original Medicare and Medicare Advantage (Plan C) health insurance plans, as well as some options within Original Medicare.
You do not need to remain in the Medicare plan that you chose during your IEP, but – unless you meet specific CMS requirements enabling a Medicare plan change – it is typically only possible to change your initially-selected Medicare options during the annual “open enrollment” period.
For this reason, it is a good idea to enroll in a Medicare plan during the IEP that actually makes sense for your overall health coverage needs.
While most people choose to enroll in Original Medicare, 34 percent of all Medicare-insured people in 2018 chose a Plan C (Medicare Advantage) health plan instead of Original Medicare (per the Kaiser Family Foundation [KFF]).
Notably, Medicare Advantage plans are privately-run health insurance plans operating under a CMS contract. One circumstance where working people nearing age 65 choose to enroll in Medicare Advantage rather than Original Medicare is when they are satisfied with their coverage under their employer-sponsored health plan (and do not want to leave that plan).
If the employer-sponsored insurer offers a Medicare Advantage plan, this can enable the older-aged worker to maintain his (or her) existent medical providers without risking the necessity of a change in medical providers. In contrast to Original Medicare, some Medicare Advantage plans include coverage for the following:
Traditional Medicare (Original Medicare) includes Parts A, B, and D. Upon your enrollment in Original Medicare during the IEP, you are automatically enrolled in Part A (hospitalization coverage) at usually no cost.
However – if you do not choose to enroll in Part B (medical services coverage) during the IEP – you will probably incur a financial penalty for delaying enrollment in Part B.
Since there is a monthly premium cost for Part B, some people refrain from enrolling in it (but this is not considered a good idea for most Part A enrollees due to the high cost of physician office visits). Part D (prescription drug coverage) is the Original Medicare option that can be the most complex to navigate in terms of enrollment decision-making. Meanwhile, delaying Part D enrollment can also result in a financial penalty.
There is an annual deductible that is a potential “out-of-pocket” cost for Original Medicare’s Part A (and a separate annual deductible applicable to Part B).
In addition, Part A normally covers only 80 percent of the incurred medical costs (and Part B also covers only 80 percent of the incurred costs). For people who need to frequently visit a doctor and/or are at high risk for a hospital admission, purchasing supplemental private health insurance (Medi-Gap coverage) can reduce potential “out-of-pocket” healthcare costs.
Life First Financial & Insurance in Florida is available to assist you with understanding your Original Medicare and Medicare Advantage options. Contact us today to discuss your options.