Goodbye Private Insurance, Hello Medicare: All You Need To Know When You Reach Eligibility
Making sure you’re ready for that next chapter is all about timing and learning how to navigate the world of Medicare.
What does anyone under 65 know about signing up for Medicare? Probably nothing. Do you magically have coverage and never have to worry about it again on the day you turn 65? Well, no.
It’s best to prepare yourself because signing up for Medicare can be very complicated. If you’re approaching 65, or just plain curious what Medicare is about we will explain the program, how to register, and pitfalls to avoid when you get to your mid-60s.
What is Medicare?
The magic number is 65. This American national health insurance program started in 1965 and is offered to citizens who are 65 or older, younger people who are receiving Social Security disability benefits, and individuals in end-stage renal disease. The program is administered by the Centers for Medicare and Medicaid Services and it helps with the overall cost of health care such as hospital, medical, and other health bills for our nation's elderly. (Not to say turning 65 means you’re elderly, that’s just how it’s defined.)
What do you have to do to qualify for Medicare?
You qualify for Medicare if you are a U.S. Citizen or permanent legal resident who’s been in the United States for at least five years, have worked 10 years, and paid Medicare taxes. You need to be 65 years old or older, disabled, or have specific medical conditions.
How do I sign up for Medicare?
The fastest and easiest way is to sign up for Medicare online. You’ll be able to sign up, and if you qualify, receive financial help. You can also call 1-800-772-1213, or contact your area’s local Social Security office. You’ll need documents which prove your Social Security number, date and place of birth, citizenship status, date and place of marriages or divorces, as well as income and job verification.
This official Medicare link gives you an overview if you’re looking for more detailed information.
Does Medicare cover all your health insurance needs?
No, Medicare doesn’t cover everything.
This part can truly get confusing. To bridge the gap between what is and isn’t covered, you can purchase supplemental insurance. Here’s how that works.
Medigap is offered from a variety of private health care insurance companies. These supplemental insurances will cover excluded items like copayments, coinsurance, and deductibles.
In addition to Medicare A (hospitalization) and Medicare B (outpatient services) you can enroll in a Medicare Advantage Plan. Sometimes this is called "Part C" or "MA Plans," which are offered by Medicare approved private companies. Most Medicare Advantage plans offer a "Part D," which includes drug coverage. Depending on which plan you select, Medicare Advantage plans typically include extra coverage for things like fitness programs, vision, hearing and dental services, transportation to doctors offices, and even over-the-counter drugs.
Do you have to apply for Medicare?
Yes, Federal law requires you to sign up or switch to Medicare at age 65.
However, If you’re already collecting Social Security benefits by 65, you don’t need to enroll. You will be automatically enrolled in Medicare Part A (hospitalization) and B (outpatient services).
If you’re not collecting Social Security by age 65, you need to enroll in Medicare. Your Initial Enrollment Period is 3 months before you turn 65, and 3 months after for a total of 7 months.
If you’re working full time at age 65 and still covered under private insurance, you don’t have to enroll in Medicare right away – you’ll qualify for the Special Enrollment Period. This means when you stop working and your coverage ends you’ll have 8 months only to sign up for Medicare, which will then start the next month after you enroll.
Is there a penalty if I don’t enroll in Medicare during my Initial Enrollment Period or my Special Enrollment Period?
Yes! Getting the timing right really matters.
If you miss your 7 month Initial Enrollment Period or your Special Enrollment Period (8 months after you stop working) you have to pay a monthly late enrollment penalty. In fact, the penalty goes up the longer you wait — customarily 10-percent per year you put off enrolling — and these penalties can follow you every month for as long you have Medicare, which means the rest of your life.
Another big issue is you may have to wait to enroll, possibly leaving you without any coverage during that period. Late enrollees need to wait for the General Enrollment Period, which is January 1st through March 31st. Any gap in health insurance can end up costing lots of money, which is entirely avoidable if you enroll when you're eligible.
One Last Warning
Do not put off enrollment once you are eligible!
If you’re getting reminders in the mail, emails, texts, calls, reminders from friends or family, or happen to see a commercial that jogs your memory about Medicare, take it seriously. Put it on your calendar, write it on your fridge, do whatever it takes to not miss your 7 month window (or 8 months once you no longer have an employment-based health insurance plan).
Medicare Pitfalls To Avoid
Things can get a little confusing if you’re still working and covered by insurance at age 65.
While it seems logical to not sign up for a government insurance program like Medicare if you’re already covered and don’t need it, this in fact can become a problem. The best solution is to login to the Medicare website and go through the series of questions to determine if and when you will need coverage.
If you’re working and covered under private insurance at 65 you don’t need Medicare and you’ll qualify for what is known as a Special Enrollment Period, but if you don’t exactly qualify for that exemption or follow its rules, you will be penalized.
An article in the New York Times covered such a story, where a 65-year-old full-time fully-insured worker ignored his Medicare sign up. At 69 he was laid off and mistakenly chose COBRA as his private insurance rather than sign up for Medicare under the Special Enrollment Period criteria. When he finally decided to look into and sign up for Medicare he realized his mistake. This innocent mistake in judgment cost him money and will cost him more money since he now has to pay a late-enrollment penalty premium for the rest of his life.
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