You’re approaching 65, which means you need to start thinking about the decisions you’re going to make regarding Medicare. These decisions could have a long-term impact on your health care coverage, so it’s important to be informed, give yourself enough time to make said decisions, and don’t be afraid to ask questions when you don’t know something.
Unfortunately, dealing with Medicare can sometimes feel like navigating a maze. To make it a little easier to understand, I’ve put together a list of 5 steps you should consider before it’s your time to sign up for Medicare.
1. Review and familiarize yourself with the costs.
You need to know the costs so you can plan and be prepared to take on the financial weight. While your costs may vary depending on your type of Medicare and what extras you have, here are a few general numbers you need to know.
- Part A deductible is $1,408.
- Part B deductible is $198; the premium is $144.60.
- Part D premium is $42; the deductible is $435. Note that some plans don’t have a deductible.
- Medicare Advantage has an out-of-pocket maximum of $6,700 (not including prescription drugs).
Note that these numbers are for 2020.
2. Enroll in Part B.
Part B covers a variety of outpatient and preventative care services, such as flu shots, home health care, ambulance rides, mammograms, colonoscopies, doctor’s visits and more. It’s not mandatory to sign up for Part B, but it’s a good idea.
Part B has a small window during your initial enrollment period, and once you’re outside of that window, you have to pay a penalty for signing up late and potentially be stick with higher rates of up to 10% more than what you’d normally pay, so it’s important to be on top of the ball with this step.
Enrollment lasts only seven months, beginning 3 months before your 65th birthday and 3 months after your birthday. Outside of that, you can sign up during the general open enrollment starting the first of the year.
3. Decide whether you’re going to go with Original Medicare and a Medicare supplement plan, or a Medicare Advantage plan.
Medicare supplement (also known as Medigap) plans are combined with Original Medicare to pay for expenses that Original Medicare doesn’t cover, like copayments, coinsurance, and deductibles.
Medicare Advantage is Medicare Part C and takes the place of Original Medicare, issued through a private insurance company instead of through the federal government. Medicare Advantage plans must cover everything Original Medicare covers.
Supplement plans usually don’t cover long-term care, dental or vision care, hearing aids, eyeglasses and contacts, or private-duty nursing, while Medicare Advantage plans do cover many of these extras.
Medicare Advantage plans have a more resistive network than a Medicare supplement plan (which will cover any doctor that accepts Medicare). If having a wider network is important to you or you travel throughout the year, a supplement plan might be a better fit.
Medicare Advantage tends to be less expensive and cover more services, which may be better for your budget. On the other hand, while supplement plans may have higher premiums, they usually leave you with very low out-of-pocket costs.
4. Decide if you want Medicare Part D.
Medicare Part D helps cover the costs of prescription drugs. Even if you currently don’t take medicine, I highly suggest having some form of prescription drug coverage to protect yourself in the future.
Medicare Advantage plans often offer prescription drug coverage, so if you’re going that route, you do not need to sign up for Part D. Check the specific plans for more details on that.
If you’re leaning more toward a Medicare supplement plan, however, you may want to consider getting Part D since supplement plans usually don’t cover the cost of prescription drugs.
5. Plan for long-term care.
Medicare typically doesn’t cover long-term care, and if it does, it’s brief. At least 70% over individuals age 65 and older will need some form of long-term care at some point in their life. This shouldn’t be something that is left up to chance because it could financially devastate you.
You need to have an honest and open conversation with yourself about your needs and the health care problems you anticipate and even those you can’t anticipate. Long-term care can cost upwards of hundreds of thousands of dollars a year. You need to anticipate that possibility and plan ahead for those life-changing what-ifs.
One option is to get long-term care insurance; you can also save and earmark that money for long-term care.
Initial Medigap Open Enrollment Period
This is a six-month period that automatically starts the month you turn 65 and are enrolled in Medicare Part B. It is generally the only time you are guaranteed acceptance in a Medicare supplement plans, and that insurance companies must sell you plans at the best available rates. After that, you need to qualify medically.
Initial Coverage Election Period
The initial coverage election period is the first chance you have to sign up for a Medicare Advantage plan or a Part D plan. ICEP begins three months before your 65th birthday. It ends either the last day of the month before you enroll in both Parts A and B or the last day of your open enrollment for Part B, whichever is later.
Medicare General Enrollment: If you missed the initial enrollment date for Part B (three months before your 65th birthday, extending to three months after your 65th birthday), you can sign up for Medicare now.
January 1 – March 31
Medicare Advantage and Part D Annual Open Enrollment Period: During open enrollment in the fall, you can sign up for Medicare plans or switch plans as you desire.
October 15 – December 7
If you have any questions or would like more resources, please reach out to us or your Personal Benefits Manager. We’re here to help you in any way we can, so you should take advantage of us as a no-cost expert source and guide.
Jim Corn is a Personal Benefits Manager at MediGap Advisors. Jim has a passion for bringing clarity to those confused about Medicare. He is an authority on Medicare, Medicare supplement plans, Medicare Advantage plans, and Part D prescription drug plans. Read more about Jim on his Bio page.