Decoding Medicare: Five Simple Tips for Making the Right Decision
Choosing the right Medicare plan can be daunting and confusing. Ensuring that you enroll at the perfect time, choose the ideal coverage for your needs, and do it all at the best possible cost can feel overwhelming. That’s why this post delves into five essential tips to guide you through the decision-making process, while also highlighting other important factors to consider.
Understand Your Timing
When it comes to Medicare, timing is crucial. Keep in mind that not everyone has to enroll in Medicare at age 65. If you’re covered by a retiree plan, on an ACA plan, COBRA, TRICARE, or if you work for an employer that has less than 20 employees, you must enroll in Medicare at 65. However, if you or your spouse are still working and the employer has 20 or more employees on the payroll, you do not have to enroll in either Medicare A or B.
If you enroll in Medicare A only and contribute to a health savings account (HSA), remember that no new money can go into an HSA once you take any form of Medicare. As such, it is much more beneficial to not enroll in Medicare and continue contributing to your HSA, assuming you have one.
Also, remember that anyone who wishes to begin Medicare at 65, they will have what is called an initial enrollment period, which lasts for seven months: three months prior to their 65th birthday, their birth month, and three months after their birth month. However, if you are already on Social Security, you will be automatically enrolled in Medicare.
Special Enrollment Period
If you are still covered by a group plan and have 20 or more employees on the payroll, you will enter Medicare through what is known as a “Special Enrollment Period.” To be eligible for this period, you will need to prove that you’ve had credible coverage at work or via your spouse’s employer, tracing back to when you were first eligible for Medicare at age 65. You will need to use the CMS L564, a form your employer fills out to prove credible coverage, and a CMS 40B form to inform Medicare when you want your coverage to start.It is highly recommended that you submit these forms to your local SSA office within 60 to 90 days of your preferred start date, allowing for a smooth and seamless enrollment process.
Understand Your Medicare Options
Once enrolled in Medicare A and B, there are typically two primary options to choose from:
Option One: Original Medicare A and B + Supplemental Plan + Separate Drug Plan
Option one is to stick to original Medicare A and B and get a supplemental plan (also known as a Medigap policy). This is a private health insurance plan that fills the gaps that original Medicare does not cover. Remember, original Medicare does not cover anything at 100% except for preventive services.
The highly sought-after supplemental plan G provides coverage for five out of the six gaps, which means you only have to pay the B deductible of $283. On the other hand, supplemental plan N covers four of the six gaps, but it does come with a $20 copay for each doctor visit and a $50 copay for emergency room visits. With the supplemental plan, you will need a separate drug plan that you can change once a year during Open Enrollment.
Option Two: Medicare Advantage Plan (C Plan)
Another good choice is what’s referred to as a Medicare Advantage Plan, also known as a Medicare Part C. This plan essentially replaces and repackages your Medicare A & B coverage and is administered by a private insurance company.
Medicare Advantage plans usually carry a zero premium but require copays, deductibles, and coinsurance. Also, the plan comes with a max out-of-pocket limit that resets every January. However, Medicare Advantage plans may offer additional benefits that are not included in Original Medicare. Benefits vary by plan and location, and limitations may apply. Contact a licensed agent to learn more.
Key Differences Between Original Medicare A and B + Supplemental and Medicare Advantage
- Providers: With Medigap policies, you can visit any provider that accepts Medicare. However, with Advantage plans, you have to make sure that the provider is in your network.
- Premiums vs Copays: With a Medigap policy, you pay a premium and eliminate most of the financial liability. With a Medicare Advantage plan, you assume the liability up to the max out-of-pocket for the year.
- Pre-authorizations: With Medigap policies, there are no pre-authorizations. But with Advantage plans, you may be required to get pre-authorization for about 70% – 72% of your services.
- Plan Permanency: Medigap policies are written for life, and they can only be canceled if you fail to pay the premium. Advantage plans, on the other hand, are written for one calendar year and are tied to the service area where you live, not to you.
When to Enroll in a Plan
You have a seven-month window to enroll in Medicare Advantage, just like with the Initial Enrollment period (your birth month, three months before, and three months after). However, you must enroll in a Medigap policy either six months before or six months after your B date, beyond which you may have to medically qualify for the plan.
Keep in mind that your choice of Medicare plan, whether it’s a supplemental plan or Medicare Advantage, has long-term implications that could impact your future self a decade or more from now. Stay connected for additional insights that will enrich your knowledge of Medicare and help you make better informed decisions. It’s time to prioritize your health and well-being!