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1. When To Enroll

Most people realize that there is a 7-month window to enroll in Medicare surrounding the 65th birthday.  Those 7 months are the 3 months prior to the birth month, the birth month and 3 months after the birth month.  What most people don’t know is that if you do not enroll before the birth month, there is a delay when Medicare will become effective. 

What does this mean?  My birthday is July 5th, so if I enroll in Medicare in the 3 months prior, that is April, May or June, my Medicare start date will be July 1st.  However, if I enroll in July, my start date will be August 1st.  If I enroll in August, my start date will be October 1st.  If I enroll in September, my start date will be December 1st.  Finally, if I enroll in October, my start date will be January 1st.  So, even though I enroll any time during this 7 month window, I will avoid a Late Enrollment Penalty; however, the actual start date can be significantly delayed.

2. Avoiding the Late Enrollment Penalty

Enrolling late in Medicare can not only cause delays in starting Medicare, but can have long-term financial implications in the form of a Late Enrollment Penalty.  What most people do not know is that there are actually 2 different Late Enrollment Penalties.  If someone does not enroll in Medicare when they are first eligible (see point number 1 above) and they do not have any other Health and Drug Insurance that Medicare determines to be “creditable,” a Late Enrollment Penalty for may apply for both Part B AND Part D!

The Late Enrollment Penalty for Part B and Part D is a lifetime penalty, meaning that the penalty must be paid for the rest of your life!  Let’s use the example below to calculate the penalties:

For Part B, let’s say that I turned 65 in July, 2018 but I didn’t enroll until the following July, 2020 and I have no other health insurance coverage.  Medicare calculates a 10% premium penalty for each 12-month period Medicare enrollment is delayed.  My monthly premium would be 20% higher (2 years X 10%).  Since the base premium for Part B in 2020 is $144.60, my monthly premium with the penalty will be $173.52 ($144.60 X 0.2 + $144.60).  That is an almost $30 per month penalty that I will have to pay for life, potentially totaling thousands of dollars! And that is just for Part B.  Let’s now look at the penalty for Part D.

Using our example, I had to enroll in a Part D plan by October 31, 2018 but I did not. At this point, June 2020, I would need to wait until the Annual Election Period (Open Enrollment), which runs from October 15 – December 7 and takes effect January 1, 2021.  Medicare will calculate the total number of months I was without a Prescription Drug Plan (26 months in our example) and multiply by 1% of the “national Base beneficiary premium of $32.74.  Here’s the math: .26 (26% penalty) X $32.74 (2020 base premium = $8.51rounded up to $8.60.  My Late Enrollment Penalty for Part D is $8.60 per month for the rest of my life.

3. What if I am still working and getting insurance through my employer?

This is one of the most common scenarios I come across, and the answer is not always so simple.  In many cases, having employer insurance would allow someone to delay their enrollment into Medicare and entirely avoid the Late Enrollment Penalty discussed above.  However, there are several factors to consider, beginning with, is my employer insurance considered “creditable” by Medicare? 

In most cases, asking the HR or Benefits department will give you the answer and if the coverage is creditable, then delaying Medicare without penalty is an option.  But is it the best option?  To answer that, we must do a thorough comparison of the employer plan and what is available through Medicare.  I advise my clients to consider the following in making a decision:

• Are there any dependents covered on the employer plan? If so, it may be worthwhile staying on the plan, because coverage for the dependent(s) may be much more costly.

• How much is being deducted from the paycheck for the Health Insurance?  If it is more than $100 per month, further analysis is required.

• What are the co-pays, deductibles, co-insurance and Annual Maximum Out of Pocket on the employer plan?  Often times, these are much higher than what Medicare offers.

In summary, to make the best decision, always compare, analyze and ask questions.

4. I’m Enrolling In Medicare, which plan should I choose?

Medicare plans are not one size fits all.  I always suggest to folks that Medicare should be looked at as any other financial or retirement product.  That means, in order to maximize benefits and keep costs as low as possible, a strategic approach should be used. 

Now, people select their Medicare plan in many ways: based on a television commercial, chosen from among the pile of mailed advertisements, even suggestions from friends and family.  However, those are not strategic methods.

In fact, a Medicare plan should be selected based on YOUR specific situation. When I conduct a Medicare review, I analyze medications (co-pays can vary by hundreds of dollars from one plan to another), doctors, networks, benefits and out of pocket costs. 

The purpose of a Medicare review is to determine which plan is going to give you the most benefits and lowest out of pocket costs.  You will only know the answer if you approach this in a strategic way, through an analysis with a qualified, licensed Medicare broker, one who is contracted with most major Medicare Insurance plans.

5. What kind of costs and benefits can I expect from the different plans?

This is the most exciting part of analyzing Medicare plan options.  Here in Los Angeles County, we are blessed with many different plan options and many benefit packages. If the goal is to keep costs as low as possible and benefits as high as possible, then we really need to know what the different plans are offering. 

The nice thing for us here in L.A. County is that we can select our plan based on benefits that are important to us.  For instance, Medicare does not cover routine Dental services and so, for someone for whom Dental coverage is important, we can select a plan based on the richest Dental benefits.For others, a strong Over The Counter benefit is important.

Some plans include hundreds of dollars in credit towards things like cold medicine, pain relievers, vitamins, even toothbrushes and toothpaste, saving people thousands of dollars and trips to the store.  And for some, there are even plans available that will actually refund you a majority of your Medicare Part B Monthly Premium, which is $144.60 this year.  That’s right, there is a plan that will actually rebate to you $109 of that, meaning that your Medicare Part B Premium will only be about $35 per month!

Conclusion

In summary, most people find Medicare to be very confusing, without even realizing all of these different factors to consider.  The way to truly know that you are receiving the benefits that you worked so long and hard to earn is to schedule a no cost, no obligation Medicare Review with an independent, licensed Medicare Broker like myself.  I do not work for any insurance company; rather, I contract with all of the major Medicare Health Plans, which allows me to review and recommend the plan that is right for you from among the dozens of plans available.  And, the relationship does not stop there. 

As your Medicare Broker, I am your main point of contact for any questions, issues or concerns about your plan.  No more 800 numbers, no more waiting on hold; just a quick call to my cell phone to get your questions answered.  Lastly, every year there are changes to Medicare, changes to the Medicare Health Plans and perhaps changes in your life – a new medication, a new doctor, etc.

Between all of these changes every year, your costs and benefits may be affected.  That is why I conduct an annual review for all of my clients, so that year after year, you are paying as little as possible, while getting the most benefits available.  And best of all, my services are no cost to you!  I look forward to servicing your Medicare needs for many, many years to come.