December 17, 2017
Mature African American Couple Using Laptop At Breakfast

New to Medicare? 6 Things to Know

by Nancy Metcalf  

As universal, government-run coverage for the elderly and disabled, Medicare would seem to be simpler than the private health plans that most other people have to navigate. But no. Signing up for the first time can be tricky, especially if you are not already receiving Social Security benefits. Here are six important things to know.

1. If you are not already receiving Social Security, Medicare won’t automatically enroll you. So you will have to sign up yourself, which you can do online at Medicare.gov or at your local Social Security office. The so-called “Initial Enrollment Period” encompasses the three months before, the month of, and the three months after the month you turn 65. Even if you are still working and receiving employee health benefits, you should enroll at a minimum in Medicare Part A, which covers hospital inpatient care, some types of home health care, hospice care, and care in skilled nursing facilities, upon turning 65. (Employees of businesses with 20 or fewer workers should enroll in both Parts A and B.) There’s no premium for Part A, and signing up will get you into the system. You’ll also start receiving “Medicare & You,” the consumer handbook that Medicare puts out every year.

2. Once you leave your job, you must enroll in Part B. Medicare Part B covers outpatient care such as doctor’s visits, tests, and outpatient treatments. You will have to pay a premium for it unless your income is very low. You have eight months from the date that your workplace coverage ends to get this done, but it’s better to do it immediately—ideally, the coverage should start the day after your employer plan ends. Otherwise you could find yourself in a coverage gap.

3. Don’t even think about taking COBRA instead of Medicare Part B. When you retire from a job, the government requires your employer to send you a notice about extending your workplace plan in accordance with the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA. What no one will tell you is that if you are 65 or older, your COBRA plan will only pay “secondary” to what Medicare A and B would have paid—even if you don’t currently have those coverages. Moreover, any delay in enrollingin Part B triggers a lifelong late enrollment penalty: a 10 percent premium surcharge for every year you should have been enrolled, but were not.

4. If you have an individual plan purchased on an exchange, cancel it and join Medicare when you turn 65. Again, it’s likely that no one at the insurance company will give you a heads-up on this or stop accepting your premium payments. But your premium tax credits will stop after you turn 65.

5. Enroll in a Part D drug plan upon joining Part B even if you don’t take any medications right now. It’s not required, but as with Part B, if you delay enrollment, you’ll be charged a lifelong late penalty of 1 percent of the average annual Part D premium for every month you delayed. Caveat: If you have a retiree plan that covers prescription drugs at least as generously as a Part D plan, you’re exempt from this rule. Your benefits administrator can help with this information. If you don’t like the Part D plan you picked, you can change to another one during the annual open enrollment period, which runs from October 15 to December 7.

6. If you are hopelessly confused (as are many people navigating Medicare sign-up), get free counseling. Every state has a State Health Insurance Assistance (SHIP) Program that provides free, expert, individualized help to Medicare beneficiaries. Find your state’s SHIP agency. You can also call Medicare directly with questions at 1-800-MEDICARE (1-800-633-4227).

See also: How to Pick the Best Health Plan and 5 Tips for Buying an Obamacare Insurance Plan.