Congratulations.
You are approaching 65 years old and will soon be eligible for Medicare. As you
will soon find out, this is an extremely complex government program with few
“take backs” and no “start overs.” It is best for an applicant to go into the
decision-making phase with a clear understanding of the programs and choices.
Although information is available online, it is overwhelming and time-consuming
for individuals to make sense of it all – and they are likely to miss some
important points that can cost them a lot of money.
What Is Medicare?
Original, or “legacy,” Medicare is the healthcare typically
available to seniors when they reach 65 and have 40 quarters of employment. It
has two components: Part A helps cover inpatient care in hospitals, skilled
nursing facility care, some home health care, and hospice care. Part B helps
cover services from doctors and other health care providers,
outpatient care, some home health care, some durable medical equipment, and
many preventive services.
Significantly, Medicare only covers 80% of those
charges. The remaining 20% can be covered by a separate contract with insurance
companies that have a Medicare contract. This is called a Medicare supplement, popularly known as “Medigap.”
Additionally, inside of these programs is another set of choices designated by
letters A-N. You must also consider a prescription drug plan, or PDP, which is
called Part D of Medicare and must be paid for separately.
There is also an option to choose an alternative to
legacy Medicare, called Medicare Advantage. With Medicare Advantage, you buy
insurance from a private insurance company that contracts with the government
to provide at least as much coverage as Medicare parts A and B. Medicare
Advantage differs in that it typically has the PDP rolled up in the health
package. Medicare Advantage also typically includes a dental plan, a vision
plan, chiropractic, podiatry, and other benefits as part of the package. In
original Medicare, these are all applied for and paid for separately. I am
certain that the question you have right now is, “Why wouldn’t I want those?”
It is a great question. Please make certain that you get it answered.
All this is very confusing. Luckily, there are short
cuts available that can fill in the information gaps at no cost to you.
Why Use an Agent?
To cut through the confusion and make the best
decision for your situation, you can choose to use an independent Medicare
agent. Agents receive training for the various Medicare insurance products (i.e.,
Medicare Advantage, supplements, and/or PDP), which can last the entire month
of July and typically includes up to 70 or more different qualifying exams.
This is every single year.
You, as the consumer, do not pay anything to the
agent. We, the agents, consult, answer all your questions, put all our training
at your disposal, and receive our income directly from the insurance companies
that we are appointed with. We cannot charge independently. Additionally, by
using an agent, you will not pay more for the program. None of the consulting
charges are passed through to the applicant. Furthermore, you can never be held
captive by that agent. You can consult with as many agents as you wish. Only
you will designate who will write your policy. So please call a licensed agent
or two and ask away with complete assurance.
Deadlines Are
Important
There are dates and timetables that you have to be
aware of. The seven-month period starting three months before your 65th
birthday, the month of your birthday, and the three months after are a special
election period called Initial Enrollment Period or IEP. For example, if you
are 64 and have a September 21 birthday, June 1 is the start of your election
period. It will continue until you have made a permanent decision or until
December 31.
There is a special provision for enrolling in Medicare
supplements (Medigap). To quote Medicare.gov:
You get a six-month Medigap Open Enrollment period, which starts the
first month you have Medicare Part B and you’re 65 or older. During this time, you can enroll in any Medigap
policy, and the insurance company can’t deny you coverage due to pre-existing
health problems. After this period, you may not be able to buy a Medigap
policy, or it may cost more. Your Medigap Open Enrollment Period is a one-time
enrollment. It doesn’t repeat every year, like the Medicare Open Enrollment
Period.
Here’s another confusing stipulation: If you have
employer health insurance, and you are still working under their health
benefits, you can delay making an application for part B. When you retire or
separate from your service, you can then apply for part B and start a six-month
special election period or SEP. The significance is that you can join a Medigap
plan with no underwriting or health pre-existing conditions, exactly as in the
IEP.
It would take me about 2,000 more words to explain
this more fully. What you need to know though, is that if you are continuing
under your employer benefit health plan, then your birth date is less
significant. However, it is still highly recommended that, three months before
your 65th birthday, you call and review your specific circumstances
with an appointed agent.
The IEP or SEP is also not the only time you will have
to consider your choices. Every year as annual enrollment approaches, Oct. 15th
to Dec. 7th, you could be inundated with solicitations to change
your plan. If you understood what you enrolled in initially, you will be less
likely to make changes with an agent that you have never spoken with
previously. You will have the confidence to go forward at your speed.
Some Final Tips
1) This
article boils down to this sentence: Early
in your exploration, you will have the two major types of Medicare
superstructures presented to you: Original Medicare, or “legacy” (with or
without a Medicare supplement) and Medicare Advantage. Please copy
those last two lines and make it your business to have both explained fully. Please
do not make a decision until you fully understand both original Medicare and
Medicare Advantage. If you are unclear, have the agent explain it again. If it
is still unclear, go look for agent #2. I spend a huge amount of time on this,
with supplemental handouts and program guides, specific to each client. Each
client’s circumstance is different, so the programs have to be explained to
fit. These are big decisions. They can be permanent.
2) As I said in the beginning, this is a very
complicated program. Please relax, you will get it. As it is systematically presented,
you will make choices and discard those no longer needed. You will help shape
the plan that fits you, and there is satisfaction and security in that.
3) Please apply
for Part A three months before your birth month. You will need to open a mySocial
Security account and type the request for the application for Medicare
enrollment into the search bar. Very simple. This is true even if you are
continuing with your employer’s insurance. Part A will cost you nothing and
greatly simplifies all the next steps. You don’t even need to fully understand
this, as there is no quicksand here. Again, you are encouraged to call any
appointed agent and ask them.
4) Lastly, you can never start asking questions too
early, but you can easily start too late. I have seen late time and time again.
Medicare uses very hard dates with no flexibility. It can be, and typically is,
stressful. I have also had many clients call me a year ahead. We then follow up
regularly. If you have a human resources department at your current employer,
start your conversations with them early as well. Four months before separation
from service or your 65th birthday is not too early.
Clients who start early come into the decision-making
process very relaxed. This is as it should be, and it is certainly what I
recommend.
Howard Friedman,
ChFC®, CLU®, can be reached at 443-850-4975 or Hfriedman1@outlook.com
