I recently wrote about who needs to enroll in Medicare and who doesn’t. For some people, enrolling in Medicare is very straightforward, but this is not the case for everyone. Here are some details that can cause confusion about enrolling in Medicare.
Medicare Part A
A person who turns 65 and has employer health insurance does not need to enroll in Medicare Part B, which has a monthly premium ($104.90 in 2013). But what about Part A?
Part A has no premium. Anyone who has worked 10 years (40 quarters) and paid Medicare taxes gets Part A when they turn 65. Part A covers hospitalization, home health care, skilled nursing facility charges, and hospice.
People who delayed Part B because they continued working after 65, and kept their employer health insurance, will have different effective dates for Part A and B on their Medicare card when they finally enroll in Part B. This detail is very important when a person applies for a Medicare Advantage plan or Part D drug coverage.
If your birthday is the first of the month, say July 1st, 1948, your Medicare doesn’t begin on July 1st – it begins on June 1st. Don’t ask me why.
Part D late-enrollment penalty
Part D is voluntary, but….. if you don’t sign up when you are first eligible, you will face a late-enrollment penalty if you ever do enroll in a Part D plan. This applies to Medicare Advantage plans that include Part D.
I have heard stories of insurance agents who got complaints because they failed to explain this to clients who had never enrolled in Part D, but were enrolling in a Medicare Advantage plan that included drug coverage.
Here’s an example: Mr. Smith is 70 years old and has been on Medicare since he turned 65 – but he never enrolled in a Part D drug plan. During the last Open Enrollment Period, he signed up for a zero-premium Medicare Advantage plan that includes Part D.
Mr. Smith was happy with all the benefits of his Advantage plan: no monthly premium; a free gym membership; free dental cleanings twice per year; reasonable co-pays to see his doctors.
Then Mr. Smith got a letter from the Medicare Advantage plan telling him he would have to pay $18 per month because of the Part D penalty.
Mr. Smith complained to his Advantage plan that his agent never informed him of the Part D penalty – and he didn’t want to pay $18 for something that is supposed to be “free”.
If the agent had asked Mr. Smith about his previous Part D coverage, he should have known Mr. Smith would be hit with a late-enrollment penalty.
There’s one more thing the agent should have told Mr. Smith. Mr. Smith will pay this Part D penalty for as long as he is enrolled in a Part D plan. And because the penalty is based on the average cost of Part D plans throughout the country, it will go up (or down) from year to year.
For a brief overview of your Medicare choices, take a look at this six minute video: Intro to Your Medicare Choices