Age 64 (or sooner)
In most cases, you’re eligible to start Medicare coverage at age 65
There’s a 7-month window for initially signing up that you DO NOT want to miss. This Initial Enrollment Period is the month in which you turn 65, the three months before that month, and the three months after that month. For example, if you were born on June 15th, your Initial Enrollment Period runs from March 1st to September 30th of the year you turn 65. Some plans are harder to get outside this window – you may even be declined. In some situations, there may be financial penalties if you delay.
Note that Medicare doesn’t pay 100% of your medical costs
The rule of thumb is that Basic Medicare coverage pays about 80% of approved medical costs. If the average cost of heart bypass surgery is roughly $150,000(1), then you will need to pay about $30,000 AFTER Medicare pays their 80% share.
This is where Medicare Plans come in. They can reduce, or in some cases eliminate, this risk to your financial well-being.
“Original” Medicare Overview
Original Medicare” consists of 2 parts: Part A and Part B. Under Parts A and B, the Federal government pays a portion of the cost of your medical services directly to providers.
Medicare Part A provides basic hospitalization benefits. Part A has an annual deductible, and often you’ll be billed “copays” for services. If you’ve paid payroll taxes through your employers for 10 years or more, you’re most likely entitled to Part A at no cost.
Medicare Part B provides basic physician, lab, and outpatient benefits. Part B has an annual deductible, and often you’ll be billed “copays” for services. There is a monthly premium for Part B, which is based on your income. If you are already claiming Social Security benefits, Part B premiums are usually deducted from your Social Security check.
Note that Original Medicare DOES NOT include prescription drug coverage. However, some drugs administered by a physician may fall under Part B.
Annual Election Period for Plan Changes
Each year, from October 15th through December 7th, there is an Annual Election Period (AEP). During AEP you may be able to change your Medicare plan, subject to certain limitations. Changes made during AEP usually take effect on January 1st of the following year.
Medicare Planning involves reviewing various options available to you. Your options may be different from your relatives, neighbors, and friends, so it’s important that you talk to us.
There are 4 paths you can take:
Enroll in Part A and Part B only
You’re willing to accept about 80% medical coverage, with no prescription drug coverage. You will possibly be responsible for a significant amount of medical expenses. There is no cap on how much you may have to pay.
Additional coverage from a private insurance carrier in addition to Medicare Part A and Part B. These “Medigap” plans fill in the gaps in the coverage provided by Basic Medicare. After Medicare pays it’s portion, these plans pay most or all of what’s left. These plans are accepted by any doctor or facility that accepts Medicare, giving you the maximum flexibility and choice. These plans do not include drug coverage, so you need to add a Part D drug plan.
Medicare Advantage Plans
Private insurance carriers have contracted with Medicare to provide you with everything in Part A and Part B combined. These “Medicare Advantage” plans (also known as Medicare Part C) often provide additional benefits. Prescription drug, hearing, and eyesight benefits are examples. You may be limited to a network of doctors and hospitals who work with the private insurance carrier. Your exposure to medical costs is limited to a maximum each calendar year.
Part A, Part B, and Part D
You’re willing to accept about 80% medical coverage, but want prescription drug coverage. Prescription Drug plans are available from private insurance carriers. These plans are known as Medicare Part D, and can help you avoid costly drug expenditures. With only Part A, Part B, and Part D, you will possibly be responsible for a significant amount of medical expenses. There is no cap on how much you may have to pay.
Another consideration when deciding on a Medicare Supplement or Medicare Advantage Plan when you turn 65 and initially enroll in Medicare:
When you first turn 65, an insurance carrier cannot refuse to issue you a Medicare Supplement, regardless of your health. In the future, you may not be able to move from a Medicare Advantage to a Medicare Supplement if you have health issues, as the insurance carriers are allowed to decline coverage based on medical status and history. In the future, you can move from a Medicare Supplement to a Medicare Advantage plan during Annual Election Period, but moving in the other direction is not guaranteed.