The date you retire and the day you start Medicare are unlikely to coincide. Many Americans retire early, and many others choose to wait to collect Social Security. For Social Security, waiting to file can be a benefit, but with Medicare, waiting to enroll can cost you.
To confuse matters, there are different levels of Medicare coverage to consider. And in some cases, you have to make choices when you first enroll that you may not need or use until later in life. Here are 10 of the best ways to get the most out of Medicare:
Know When You’re Eligible for Automatic Enrollment
If you’re already on Social Security or will be collecting Social Security benefits at least four months before you turn 65, you don’t have to take any action. You will be automatically enrolled in Medicare Part A, free hospital coverage, and Part B, a monthly premium you pay for doctor visits.
But if you’re about to turn 65 and not yet collecting Social Security, you have to enroll yourself. You can enroll during your Initial Enrollment Period, which is any time during the three months before, the month of, and three months after you turn 65.
Take Advantage of a Special Enrollment Period if You Need To
If you didn’t enroll during your Initial Enrollment Period, you can enroll during a Special Enrollment Period, as long as you were covered by your own or a spouse’s work insurance plan. In that case, you have eight months to sign up after you lose your employer-based group health insurance.
There’s a Way to Get Coverage if You Miss Both the Initial Enrollment and Special Enrollment Periods
If you missed both your Initial Enrollment Period and the Special Enrollment Period, you can sign up during the General Enrollment Period (GEP), which is January 1 to March 31 of every year.
You’ll Want to Get Part B Coverage
Medicare Part B, which covers doctor visits, is optional, but you’ll want to get it.
The reason it’s optional is that some people may be covered through a working spouses’ plan, they may still be working, or they may have VA benefits.
But if you don’t get Part B right away and choose to enroll later, it will cost you more. Expect a 10% higher monthly premium for each 12-month period you wait. So if you wait two years, that’s a 20% higher cost, waiting three years will cost you 30% more, and so on.
And that additional premium cost is forever — not just in the year you sign up. So consider if a permanent 30% bump in monthly Part B premiums is worth it compared to saving today from your cheaper workplace plan.
If You Want Part B Coverage, You Have to Act During the Enrollment Window
You can’t add Part B coverage at any time. If you didn’t take Part B when you first signed up, you won’t be able to enroll until the first three months of the year, and coverage won’t start until July 1 of that year.
Or Consider Getting Part C Coverage Instead
Essentially, traditional Medicare covers most doctor visits and services or supplies that are needed to diagnose your condition through Part B. Exceptions include long-term care, dental care, eye exams for glasses, dentures, cosmetic surgery, acupuncture, hearing aids, and routine foot care. Remember, you will have deductibles, coinsurance, and copayments as well. So you may want a more comprehensive plan, called Part C.
To make matters confusing, Part C is not a supplement to Parts A and B. It technically replaces them. Part C, also called Medicare Advantage, is a private insurance plan that is an alternative to traditional Medicare. However, many Medicare Part C plans require you to have Part B as well.
Why would you choose Part C instead of traditional Medicare? Some people prefer Part C because it can be cheaper and/or because it typically offers more benefits, such as dental and vision coverage, prescription coverage and, depending on the plan, greater choice of doctors.
Know the Part C Enrollment Periods
Besides having to shop around to see if Part C is a good fit for you, there are limits on enrollment periods. Your window to choose a Medicare Advantage (Part C) plan is the three months before you turn 65, the month you turn 65, plus the three months after, totalling seven months.
If, however, you want to move from original Medicare to a Medicare Advantage plan, later on, the enrollment period is Oct. 15 to Dec. 7.
You Can Switch Between Different Part C Plans — Provided You Do it at the Right Time
You have the option to switch from one Medicare Advantage plan to another, but you can only do it during the enrollment period, which is January 1 to March 31.
You Can Switch From Part C to Traditional Medicare Later — But it Will Cost You
Medicare allows you to switch from a Medicare Advantage (Part C) plan to traditional Medicare at any time during your retirement, but there’s a cost: the Part B delay penalty. Putting off Part B now to choose a Medicare Advantage plan (Part C) would still require you to pay a higher Part B premium later if you decide to move to traditional Medicare and elect Part B coverage.
You Probably Need Part D Coverage, Too
Part D is prescription drug coverage, and it is optional under traditional Medicare and comes with an additional premium.
Most Medicare Advantage plans offer prescription drug coverage. If you choose traditional Medicare, you can pay for Part D coverage or simply skip the plan altogether and pay for drugs yourself.
The problem is, as, with Part B, there is a cost to waiting to take Part D. It’s roughly 1% more on-base drug prices for each month you wait.
And as with Part B, that’s an extra 1% for the rest of your life on drug prices that also tend to rise every year.
This penalty kicks in if you go more than 63 days without coverage elsewhere say from a Medicare Advantage plan, an employer, a union, or other coverage with comparable pricing.
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