Timing your enrollment in Medicare is crucial but can be confusing. Some enrollment may be automatic and some may require effort on your part. Additionally, there are different enrollment periods associated with different parts of Medicare. If you miss your enrollment period you may be subject to a late penalty.
When to Enroll in Medicare
There are different enrollment periods for the different parts of Medicare. Let’s start with Original Medicare, which is Medicare Parts A & B.
Medicare Parts A & B
Original Medicare is Part A and Part B. Medicare Part A is your hospital coverage. Part B is your outpatient insurance. Together, they will cover a large portion of your medical needs.
Original Medicare will help to cover specific services with doctors and hospitals who accept Medicare (most do). However, it does not cover the entirety of the costs. There are many gaps in Original Medicare and certain benefits are not covered. This is why many people look to a Medicare Supplement Plan, Medicare Advantage or Medicare Part D. We’ll discuss these momentarily.
If you are receiving social security benefits, you will be automatically enrolled in Original Medicare. However, if you are not automatically enrolled you must do so in during:
- Your Individual Open Enrollment Period
- A Special Enrollment Period (if you qualify)
- The General Enrollment Period
Individual Open Enrollment
Your Individual Open Enrollment Period is the three months before you turn 65, the month of your 65th birthday and the three months after. If you are not automatically enrolled during this time, you will need to contact your local social security office. You can also call logon to socialsecurity.gov or call 1-800-772-1213 (TTY users 1-800-325-0778).
Special Enrollment
You may also qualify for a special enrollment period. If you maintain creditable coverage elsewhere (perhaps through your employer) and undergo certain qualifying life events (namely moving or loss of coverage), you may be eligible for a special enrollment period. You will have 8 months from the date of the qualifying event to enroll in Medicare without penalty.
General Enrollment
Additionally, there is the General Enrollment Period. This is every year from January 1-March 31st. Your coverage will begin July 1st. However, it is in your best interest to enroll either during your individual open enrollment period or a special enrollment period if you qualify. If not, you may be charged a late penalty which will be tacked onto your monthly premiums in perpetuity.
Medicare Part C
Medicare Part C is also known as Medicare Advantage. Some choose to forego Original Medicare in favor of a Medicare Advantage Plan. Medicare Advantage or Part C encapsulates the benefits of Parts A & B and very often part D as well (that’s your prescription coverage). Additionally, Medicare Advantage helps to bridge the gaps of Original Medicare by limiting your out of pocket expenses. Also, very often Medicare Part C covers additional services such as dental, vision, hearing, and even gym memberships.
You can enroll during:
- Your individual open enrollment period
- A special enrollment period
- The annual open enrollment period
Like Original Medicare, your individual enrollment period is the three months prior to, the month of, and the three months after your 65th birthday.
Like Original Medicare, you may qualify for a special enrollment period.
However, the annual open enrollment period is different. For Medicare Advantage, the AEP runs from October 15th to December 7th.
MAOEP
Almost immediately after the Medicare Advantage Annual Enrollment Period is the Medicare Advantage Open Enrollment Period. This is every year from January 1-March 31. This is ever so slightly different than the Annual Enrollment Period.
During this time you can drop a Medicare Advantage Plan or switch plans BUT you cannot join a plan if you do not already have Medicare Advantage. Also, your change will become effective the 1st of the month after you’ve made the change. So, if you switch in anytime January, changes will be effective February 1st.
This is another easy way to leave a Medicare Advantage Plan (or just switch if you still want Part C, just not your plan).
Medicare Part D
Part D is an important one! Medicare Part D is your prescription drug coverage. Without prescription coverage, you could end up paying quite a bit for your prescription drugs. In fact, some name brand cholesterol medications can go as high as $1700 without prescription coverage! These is, of course, an extreme example.
Additionally, Medicare Part D is arguably one of the most confusing parts of Medicare. Like Medicare Advantage, it is offered by private carriers, so it is important that you shop around. Although there are regulations set by Medicare, some carriers may provide better plans than others for YOU!
The enrollment periods for Medicare Part D are the same as Medicare Part C: .
Your Individual Open Enrollment Period is the three months prior to, the month of, and the three months after your 65th birthday.
You may also have the option to enroll during a special enrollment period, if you qualify.
AND like Part C, the annual open enrollment period is October 15th to December 7th.
It is in your best interest to enroll in some type of prescription drug coverage (either Part C or Part D) during your individual open enrollment period or a special enrollment period if you qualify. Should you have any gaps in your prescription coverage after enrolling in Original Medicare, you may be subject to a late penalty which will be tacked onto your monthly premium. No one wants to pay more than what is necessary, so please make sure to plan ahead.
Medicare Supplement Plans
Similar to a Medicare Advantage Plan, Medicare Supplement Plans limit your out of pocket spending and bridge the gaps of Original Medicare. These plans do not cover prescriptions, so you will need Part D if you enroll in a Medicare Supplement plan. However, these plans are standardized so benefits do not vary from carrier to carrier. This makes comparison shopping much easier. Additionally, if your doctor accepts Medicare, they accept your supplement plan. Your network of covered doctors and hospitals will be much larger than with Medicare Advantage.
You can enroll in a Medicare Supplement Plan year round. There are no annual enrollment periods or late penalties associated with supplements. However, it is in your best interest to enroll during your initial enrollment period. For a Medicare Supplement Plan this is the six month period after you have enrolled in Medicare Part B. During this time, you are guaranteed any supplement plan without medical underwriting. After this time, you can still enroll, but you may be subject to medical underwriting and therefore denied.
How to Enroll in Medicare
For Original Medicare, you will either be automatically enrolled or you will need to contact social security to enroll. You can visit your local office to fill out paperwork, logon to socialsecurity.gov or call them directly.
For Medicare Part C, Medicare Part D, or a Medicare Supplement Plan you have three options:
- Contact the carrier directly and speak with an agent
- Go through a broker
- Logon to Medicare.gov
Use an Agent or a Broker
Medicare Part C, Medicare Part D, and Medicare Supplement Plans are all offered by private carriers. So, you can contact the company directly and speak with an agent to enroll. However, this is absolutely not something we’d recommend. You will not receive an additional discount or any type of incentive by working directly with a carrier because commissions are already calculated into rates and are regulated by law. If you work directly with a carrier’s agent, you will only be privy to that carrier’s plans which will make it harder to shop around.
A broker is a third party liaison who works for you, not the insurance company. A broker will help you compare all the different plans available to you to ensure that you get the right plan for your needs at the lowest possible price. There are no additional or hidden fees when working with a broker. Working with an expert will ensure that you get the best possible coverage when it comes time to enroll in Medicare. Of course you can also research in advance or complete the enrollment process through Medicare.gov.
Late Penalties
Timing your enrollment correctly is very important because you want to avoid late penalties. Namely, you want to avoid the Medicare Part B late penalty and the Medicare Part D late penalty (for prescription drug coverage).
Part B
Most people will be automatically enrolled in Original Medicare (which includes Medicare Part B) upon their 65th birthday. However, some may choose to defer Medicare Part B. You can do so without penalty if you are receiving creditable coverage elsewhere. This usually applies to people who are working past the age of 65 and choose to maintain their employer sponsored group health insurance.
So, if you are working past the age of 65 and maintaining creditable coverage elsewhere, this is a good idea. Remember, there is a monthly premium for Medicare Part B and don’t want to pay that on top of what you’re already paying for health insurance. If you choose to defer Medicare Part B, follow the instructions on the back of the card and send it back. If you keep the card, you keep Medicare Part B and you will be charged for it.
Losing your creditable coverage (in this case by retirement or possibly through a series of other qualifying life events) will trigger a special enrollment period. You’ll have 8 months to sign up without penalty.
If not, you may be subject to a late penalty. This will get tacked onto your monthly premium forever. You’ll have to pay an additional 10% for each FULL 12 month period you are without Medicare Part B.
Part D
You may also be subject to a late penalty for prescription drug coverage. If you go for a period of more than 63 days without creditable prescription drug coverage, you may have a late penalty tacked onto your monthly premium. This penalty can actually be rather minimal. It’s calculated as 1% X amount of months without coverage X national base beneficiary premium. Currently, the national base beneficiary premiums is $33.06, but it does tend to go up on a yearly basis. So, if you only go a few months without coverage, your penalty could be less than a dollar. The longer you wait, the higher your penalty.
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Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.
