Medicare Eligibility
Transitioning to Medicare, a federal health insurance plan for people 65 and older, is a popular choice among retirees as it provides beneficiaries with coverage options that are typically lower than group health care plans or private insurance. Income and medical history have no barriers on premiums and qualifications, which is a huge benefit.
Typically, Medicare Eligibility begins when you turn 65 (or younger if you have certain disabilities or diseases), but there are some requirements that you need to meet. For example:
- You or your spouse has worked in the U.S for more than 10 years (or have legally resided in the U.S. for at least 5 years) and are eligible to receive Social Security benefits, or are already receiving them.
- You or your spouse are covered through government employment.
Turning 65 and Medicare Initial Enrollment Period
The first opportunity you have to enroll in Medicare is called “Medicare Initial Enrollment Period,” or IEP. This is a seven-month window of time. It begins three months before you turn 65, your birthday month, and then three months after.
The date your Medicare Part B coverage takes effect will depend on when you signed up during the IEP window. The ssa.gov chart below illustrated effective dates in 2022:
| If you sign up during this month of your IEP: | Your Part B Medicare coverage starts: |
|---|---|
| One to three months before you reach age 65 | The month you turn age 65 |
| The month you reach age 65 | One month after the month you turn age 65 |
| One month after you reach age 65 | Two months after the month of enrollment |
| Two or three months after you reach age 65 | Three months after the month of enrollment |
Original Medicare Coverage Gaps
Getting enrolled in Original Medicare (Part A and Part B) as early on in the IEP window is prudent to ensure coverage is available the month you turn 65. However, the vast majority of Original Medicare recipients also enroll in supplemental healthcare, sometimes called Medigap. Let’s take a look at why.
- Part A: Covers emergency hospital stays.
- Part B: Covers outpatient preventive care (doctors).
Great! So that’s everything one would need, right? Hospital and doctor coverage?
….Actually, no. Here are a few examples of how the medical bill can escalate quickly with just Medicare Part A and Part B:
Hospital Visit
Sometimes a patient will be admitted to the hospital, but oftentimes they are not officially “admitted”. Instead, they are there under the title of “under observation”. In this case, benefits would be paid out under Medicare Part B. That means you are responsible for 20% coinsurance for any Part B services. This can get very costly for beneficiaries, especially on a fixed income.
Prescriptions
If a patient is given any medications while admitted, those would be covered under Part A. However, prescriptions written as a pick-up would not be covered. In a given year, this can amount to hundreds, likely thousands, of dollars. Cancer medications have been reported to cost more than $100k per patient for just one year of treatment.
Other Items Not Covered Under Original Medicare:
- Custodial care (Long-term Care)
- Dental care and dentures
- Hearing aids and fitting exams
- Eye exams related to prescribing glasses
- Acupuncture
- Routine foot care
Selecting a Plan That is Right For You
- Medicare Supplement Plans (Medigap)
- Medicare Advantage Plans (Part C)
Various healthcare carriers have their own qualifying plans. A quick online search will give thousands of options and reviews on specific supplemental Medicare policies and carriers. The reason why is that everyone’s needs are different. What your neighbor might consider a terrible plan might be the exact right one for you.
The challenge most beneficiaries experience is knowing where to start. There are so many options and lingo to learn. Even after that Initial Enrollment Period when you’ve become Yoda-level Medicare master, plans change year-to-year. Heck, an individual’s needs change, too. This is where finding your Licensed agent comes into play.
Benefits of a Licensed Agent
A knowledgeable licensed agent or broker will:
- Guide you through how Medicare works and how you can make it work for you.
- Review your needs, such as checking to see which plans your doctors are covered under and which prescription drugs would be included.
- Provide thorough explanations of pros and cons of various Medicare plans.
- Be able to present options across multiple carrier plans, not just one or two.
- Make recommendations on a Medicare plan that will not only meet your needs, but also work with your budget.
- Include family. Your family probably has questions and wants to make sure you are well cared for. Some of them may not have any experience with how Medicare works. Readily available to answer questions throughout the year, not just during your IEP window.
- Never charge for their services.
… But How Can It Be Free?
It is no small secret that the Medicare gauntlet can be frustrating and confusing. Medicare, as in the federally governed healthcare program, has written the cost of consultation services on plan selections into the price to empower you to enlist help on getting the plan that best fits your needs. So whether you decide to leverage the help of a professional or source a plan on your own, navigate all the various carriers, benefits, and intricacies of Medicare, read countless hours of articles, watch YouTube videos till you feel like you may need to upgrade your eyeglass prescription, the cost of that plan selection will be the same.
We highly recommend taking advantage of the free benefit and use that consultation to:
- Get a thorough understanding of how Medicare benefits work
- Minimize frustration and confusion
- Save time researching
- Gain clarity and confidence in your plan selection
Avoid Extra Costs
Some Medicare-eligible individuals aren’t sure of what next step they should take and so they wait. However, in the world of Medicare, this can come at a cost.
Medicare Part B Late Enrollment Penalty
The consequence of not enrolling in Medicare Part B when first eligible can be costly. If you do not qualify for a Special Enrollment Period and delay enrolling in Part B when you are first eligible, you’ll have to pay an extra 10% for each year you could have enrolled, as well as potentially higher premium rates depending on your income level. Here’s an example from medicare.gov:
If you waited 2 full years (24 months) to sign up for Part B and didn’t qualify for a Special Enrollment Period, you’ll have to pay a 20% late enrollment penalty (10% for each full 12-month period that you could have signed up), plus the standard Part B monthly premium ($164.90 in 2023).
$164.90 (2023 Part B standard premium)
+ $32.98 (20% [of $164.90] late enrollment penalty)
So, instead of only paying $164.90 for your Part B premium, your monthly premium would be $197.88
Medicare Part D Late Enrollment Penalty
If you don’t have Medicare drug coverage (Part D) or other creditable prescription drug coverage upon your Initial Enrollment Period or any period thereafter for a window of 63 or more days, you may owe a late enrollment penalty. This will be permanently added to your premium. The amount of the penalty to be added to your standard premium is dependent upon how long there was not creditable prescription drug coverage in place.
Here’s an example of how Medicare calculates the Part D penalty for someone who went without creditable prescription drug coverage for 4 years (48 months):
.48 (48% Penalty) x 33.37 (2022 Base Premium) = $16.00 / month (rounded to nearest tenth)
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