Enrolling in Original Medicare (Part A and B) or another Medicare plan option may involve planning to make sure you avoid enrollment issues, such as late enrollment penalties. The following are some common mistakes and how to avoid them.
Delaying Medicare Part A enrollment
You’re generally eligible for Medicare Part A at age 65 (or you might be eligible at an earlier age with a specific, qualifying disability) if you’re an American citizen or a legal permanent resident of the United States for at least five continuous years. You can receive premium-free Medicare Part A benefits if you have worked at least 40 quarters (10 years) and paid the Federal Insurance Contributions Act (FICA) taxes ( which includes the regular Medicare tax) while employed. You’re likely to pay a monthly premium for Part A if you have worked fewer than 40 quarters, but the amount varies depending on how many months of FICA or Medicare taxes you paid while employed.
Most beneficiaries are automatically enrolled in Part A; you typically get your Medicare card in the mail three months before your 65th birthday. If you’re not automatically enrolled (for example, if you’re close to age 65 but not receiving Social Security or Railroad Retirement Board benefits), you may have to enroll in Medicare Part A. You should enroll during your Initial Enrollment Period (IEP), which lasts for seven consecutive months beginning three months prior to your birth month.
Failure to enroll during the Initial Enrollment Period (IEP) means you have to wait until at least the annual General Enrollment Period, which runs from January 1 to March 31. Enrolling during this time means you could take an enrollment penalty of a 10% increase on the premium amount you are already paying, and this penalty lasts for double the number of years you could have been enrolled in Part A, but weren’t.
Delaying Medicare Part B enrollment
Most of the eligibility requirements for Medicare Part B are similar to those of Medicare Part A, above. As with Part A, most beneficiaries are automatically enrolled in Part B. Residents of Puerto Rico must sign up for Part B during their Initial Enrollment Period. You need to be enrolled in Part B if you want to change your Medicare coverage options in the future (for example, if you want to enroll in a Medicare Advantage plan).
Because you pay a monthly premium for Part B coverage, you do have the option of refusing this coverage when you’re first enrolled. Your “Welcome to Medicare” packet, which arrives with your Medicare card, provides instructions for opting out of Part B coverage, should you choose to do so.
In some situations, you may want to delay enrollment in Part B.
- You may decide to do this, for example, if you remain enrolled in a group health plan sponsored by an employer or union. When that coverage ends, you need to sign up for Part B within eight months of the end of the employer or union coverage.
- If you’re an active-duty service member (or the spouse or dependent child of the service member), you can delay Part B enrollment, but you need to enroll in Part B before the active-duty service member retires, to avoid a Part B late-enrollment penalty.
For most beneficiaries, however, delaying Part B enrollment can be a costly mistake. Even if you have Part B for a while, but drop it and then decide again later that you want it, you may wind up paying a late enrollment penalty for this coverage. And it’s a financial penalty that lasts for as long as you remain with Medicare. Your monthly premium may go up by 10% for each full 12-month period that you were eligible for Part B, but decided not to take it.
For example, if your Medicare Initial Enrollment Period (IEP) ended in November of 2016, and you chose not to take Medicare Part B until the General Enrollment Period (January 1 through March 31 annually) in 2019, you would face a 20% enrollment penalty and you will pay 20% more for Part B for as long as you keep your Medicare Part B coverage. Please note that even if you decide to switch over to a Medicare Advantage plan, you still have to keep paying your Medicare Part B premium.
A Medicare Advantage plan is an alternative way to receive your Original Medicare (Part A and Part B) benefits, except for hospice care, which Medicare Part A will still provide. Many Medicare Advantage plans include prescription drug coverage, and some may include additional benefits, such as routine dental and vision care. If you enroll in a Medicare Advantage plan, you’ll still need to continue paying your Medicare Part B premium (as mentioned above), along with any premiums the Medicare Advantage plan requires, as well as any copayments, coinsurance, and deductibles.
Focusing on what looks cheapest
If you’re thinking about enrolling in a Medicare Advantage plan, be aware that a plan premium as low as $0 for a Medicare Advantage plan isn’t necessarily the cheapest option. Medicare Advantage plans with $0-plan premiums may include higher copayments and coinsurance rates as a means of balancing out the plan premium as low as $0. It is generally recommended that you check a Medicare Advantage plan’s rates, and compare them against other Medicare Advantage plans in your area, before enrolling.
Failing to review your prescription drug coverage during the Annual Election Period (AEP)
Medicare costs and prescription drug coverage can change every year. Your current Medicare coverage may no longer be the best option for you the following year. If you have a Medicare plan that includes prescription drug coverage, the plan sends you a notice about any incoming changes just ahead of the Annual Election Period (AEP), which runs from October 15 through December 7 each year. During this time, you may make certain changes to your coverage.
Dropping your prescription drug coverage
Prescription drug coverage is optional, but you may be better off enrolling in a Medicare plan that includes prescription drug coverage as soon as you’re eligible for Medicare (during your Initial Enrollment Period) and holding onto it. You may enroll in a Medicare plan that includes prescription drug coverage either through a Medicare Advantage Prescription Drug plan, or, if you remain with Original Medicare (Part A and Part B), through a stand-alone Medicare Part D Prescription Drug Plan.
Even if you don’t need prescription drug coverage when you become eligible for Medicare, you might want to enroll in a Medicare plan that includes prescription drug coverage at a later date. However, if you go for 63 consecutive days or more without creditable prescription drug coverage, you could pay a penalty if you ever need this type of coverage. Creditable drug coverage is prescription drug insurance (for example, from an employer or union) that pays at least as much as Medicare’s prescription drug coverage, on average.
Excluding out-of-pocket maximums
You may want to look at a plan’s annual maximum out-of-pocket (MOOP) costs when enrolling in a Medicare plan option. Maximum out-of-pocket costs are as important as monthly premiums when comparing plan costs, because your cost sharing for covered services is applied to the maximum out-of-pocket (MOOP) cost while your plan continues to pay its agreed amount. Once the maximum out-of-pocket cost limit is reached, your plan may pay 100% of the cost of covered services for the rest of the year. Certain plans may also offer hospital out-of-pocket limits, which cap the annual amount paid for hospital stays. In the event of a prolonged illness or multiple hospital stays, these caps can provide peace of mind.
Not planning for international travel
Original Medicare (Part A and Part B) doesn’t generally pay for health care received outside the United States, except for limited emergency care. If you travel outside the U.S., it may be important for you to find a plan that includes international health benefits. Some Medicare Advantage plans may offer these benefits. Alternatively, some Medicare Supplement plans include coverage for foreign travel, should you be interested in remaining with Original Medicare (Part A and Part B) coverage, and simply adding Medicare Supplement coverage.
Medicare may offer many preventive screenings, annual flu shots, and other preventive services at no cost to you. Your plan can give you a complete list of complimentary screenings, and you should consult with your doctor to see which of these you should be taking advantage of. If you are enrolled in a Medicare Advantage plan, you may have to receive these services from a health-care provider within your plan’s network.
Help with enrolling
Shopping for the right Medicare plan option can be a daunting task. eHealth offers qualified, licensed insurance agents to assist you with navigating your Medicare options to find a plan that best suits your needs. You may also get help through your local State Health Insurance Assistance Program (SHIP). You can also call 1-800-MEDICARE (1-800-633-4227; TTY users call 1-877-486-2048), 24 hours a day, seven days a week.