If You Are Approaching 65, Map Out a Medicare Plan

Written by Ana Perez-Arrieta

Posted on Sep 29, 2017

Turning 65 Soon?

For many older Americans, 65 is a magic number.  Not only does it mean passing the age the Beatles immortalized in song, but it represents a period of transition as well, a time in which many people contemplate moving out of the workforce and into retirement.  Naturally, this transition raises a host of important questions: Do I have savings to live comfortably in retirement?  How will my health care be covered?  Should we downsize?  Where should I live?

People vary in the extent to which they grapple with these questions. Turning 65 is not an important age for Social Security anymore because for those turning 65 in 2017, the full retirement age for Social Security purposes is now 66.  While you can claim Social Security retirement benefits this year, your monthly benefit will be less than if you decided to wait until your full retirement age.  One underappreciated part of turning 65 is that everyone must make a series of Medicare decisions. If you’re an American taxpayer and you’re hitting that magic number, this means you!

One thing we try to do here at Bogutz & Gordon is break down complicated planning issues into easy-to-follow advice. As you’re turning 65, or even thinking about turning 65, here’s what you need to know about Medicare:

Medicare is the government’s health insurance program for Americans who are 65 years or older, and it covers people who are younger than age 65 with certain disabilities.  About six months before you turn 65, you should familiarize yourself with the following four parts of Medicare:

• Part A includes hospital insurance, which helps pay for inpatient care in a hospital or skilled nursing facility following a hospital stay. It also pays for some home health services and hospice care.
• Part B includes medical insurance, which helps pay for medically necessary doctors’ visits, outpatient care, lab work, home health care, durable medical equipment, and some preventive services.
• Part C includes Medicare Advantage Plans, which are managed care plans provided through private insurers, and those plans cover all the benefits provided under Parts A and B. As an alternative to Part C, you could shop around and purchase “Medigap” or “Medicare Supplemental” insurance to get many of the same benefits as a Medicare Advantage Plan.  These Medigap/Medicare Supplemental plans help cover Medicare’s co-payments and deductibles.  The Medicare Advantage Plans limit the health providers that you may use, but they are typically cheaper than the combination of regular Medicare (Parts A and B), plus  private Medigap supplemental insurance.
• Part D provides prescription drug coverage, which helps pay for the cost of prescription drugs.

Your “initial enrollment period” generally starts three months before you turn 65 and ends three months after.  So about four months before you turn 65, you will want to compare the plans for coverage and calculate the monthly costs associated with the plans. Be sure to factor in the premiums, deductibles, and copays.

Three months before you turn 65, most people will want to sign up for Medicare Parts A and B.  The “initial enrollment period” begins as early as three months before you turn 65 and goes as late as three months after your 65th birthday.  If you are already receiving Social Security, then your enrollment in Medicare will be automatic, but everyone else must sign up for Medicare.  If you sign up early, before you turn 65, then you can ensure that your coverage will start on the first day of the month of your 65th birthday.  If you sign up after your 65th birthday, there will be delays in starting your coverage.

Note that if you are still working at age 65 at a job that provides health benefits or if you have coverage through your spouse’s group health plan, you might want to delay enrolling in Medicare Part B, but you generally still want to enroll in Part A.  Be sure to talk with the human resources specialist at your employer or your spouse’s employer to select the right choice for you.

You have six months after you sign up for Medicare Part B to enroll in a Medicap policy.  After the six-month period, you can be denied or charged more for the coverage because of your health.

When you enroll in Medicare Part B, you generally want to sign up for Part D, or if you have drug coverage through, say, an employer plan, then you generally have 63 days after losing that coverage to sign up for a Part D plan without paying a late-enrollment penalty.

Be sure to enroll on time, otherwise you will have delays in coverage, and penalties will be assessed.  Yes, you read that correctly!  There are penalties that apply if you enroll late.  For example, if you fail to enroll for Part A and/or Part B of Medicare during the initial enrollment period, then you must wait until the general enrollment period for Parts A and B, which begins on January 1 and ends on March 31 of each year.  Coverage then begins July 1.  You may have to pay higher premiums if you miss the initial enrollment period.

After you’ve signed up for Medicare Part B, remember to schedule a free “Welcome to Medicare” exam with your doctor.

Once you are enrolled, you can make changes to Parts A and B during general enrollment (January through March) and to Parts C and D in the fall, October 15 through December 7.  Updated C and D coverage begins January 1.

For more information on these topics, check out the Social Security Administration’s website (www.ssa.gov) and the Pima Council on Aging’s website (www.pcoa.org).  Both agencies are great resources.  The Pima Council on Aging gives free information sessions on Medicare every month.  We have attended their session on Medicare and found it to be helpful.  We encourage you to plan ahead and learn the basics now so you can make informed decisions about Medicare when the time comes.