There are 10,000 baby boomers turning 65 every day. Baby boomers aging into Medicare are starting to find out that Medicare isn’t what they expected. They’re learning about the costs, the strict enrollment periods, and the various parts and plans they never knew about Medicare.
Anyone nearing Medicare age should take the time to learn about the program. Being prepared makes entering Medicare a much less stressful process.
Learn Your Initial Enrollment Period
Each person has his or her own unique Initial Enrollment Period (IEP). IEPs start three months before the individual’s 65th birthday month and ends three months after, creating a 7-month IEP. For example, if your birthday is July 20th, then your IEP would start on April 1st and end on October 31st. The earliest Medicare could start for someone with a birthday on the 2nd through the 31st is the first day of his or her birthday month.
However, if your birthday falls on the first of any month, you’ll get an extra month added to the beginning of your IEP. The earliest Medicare could start for someone with a birthday on the 1st is on the 1st of the month before his or her birthday month.
The IEP is the first chance Medicare beneficiaries get to enroll in Medicare Part A, Part B, Part C (Medicare Advantage), and Part D.
Remember Your Medigap Open Enrollment
Medigap plans are optional and are meant to supplement your Original Medicare (Part A and Part B). This type of plan can provide extremely comprehensive coverage, potentially leaving you with very little to pay out of pocket. To apply for Medigap, you have to answer a series of health questions before you’re approved.
However, you get a one-time Medigap Open Enrollment window where you can apply for any Medigap plan in your area without having to worry about pre-existing conditions. This window starts the day you are age 65 or over and Part B becomes effective, and lasts for a total of 6 months.
For example, if your Part B starts July 1st, then you have until December 31st to apply for a Medigap plan without having to answer health questions.
Remember the Annual Election Period
During the Annual Election Period (AEP), you can enroll in, change, or dis-enroll from a Medicare Advantage plan (Part C) or Part D drug plan. Many Medicare beneficiaries confuse the AEP with the Medigap Open Enrollment window.
This is because Medicare sometimes refers to the AEP as Fall Open Enrollment. Since both periods have the words “open enrollment” in their titles, they are easy to get confused. Remember that the AEP is not a time when you can enroll in a Medigap plan without answering health questions. If your Medigap open enrollment period is over, you can still apply for a Medigap plan, but you’ll likely have to answer health questions.
The AEP runs from October 15th until December 7th every year.
Don’t Miss Your Initial Enrollment Period
Medicare applies late penalties to those who enroll in Medicare late. If you apply for Medicare after your IEP has finished, then you may owe lifelong late penalties on top of your regular Medicare premiums. Late penalties can occur on Part A, Part B, and Part D.
However, if you have creditable coverage for Medicare, you can delay enrolling in Medicare past your IEP and still avoid owing late penalties. The most common form of creditable coverage for Medicare is a large employer group plan. If you work past 65 for an employer who has 20+ employees and you’re enrolled in their insurance plan, you can likely delay Medicare without owing penalties in the future.
Research Your Options
As mentioned earlier, you can enroll in a Medigap plan to help cover Part A and Part B out of pocket costs. You also have the option to enroll in a Medicare Advantage plan to lower out of pocket costs. These types of plans are good to consider since Medicare doesn’t have a cap on out-of-pocket expenses.
These two types of plans are extremely different. Medigap plans may be the most cost-effective option for some, while Medicare Advantage plans may be the most cost-effective option for others. Learn the differences in coverage, prices, and limitations for each type of plan before deciding which plan is right for you.
Above all else, always remember your Medicare situation is unique to you. Your premiums, enrollment periods, and most cost-effective options are unique to you. Don’t just enroll in the plan your neighbor chose without doing your research, or you could make the wrong decision.