26th Oct 2015
Approximately 10,000 Americans turn 65 years of age, per day, and become eligible for Medicare benefits. Selection of which Medicare benefits are best for you can be a daunting decision. Don’t feel alone if you do not understand the myriad rules, regulations, eligibility periods, according to a recent Bankers Life and Casualty survey of people age 47 to 64, 56% say they know little or almost nothing about Medicare.
The annual Medicare open enrollment begins October 15, 2015 and goes through December 7, 2015. During the open enrollment the individuals may select which coverage if best for them. Below are some considerations to take into consideration in making your decision.
- Misunderstanding enrollment periods: You may have read about “open enrollment” and gotten the idea that this is the only time you can sign up for Medicare. This is one of the first confusing statements people are faced with, and which is not entirely correct. The fact is the Medicare, open enrollment (Oct. 15 to Dec. 7 each year) is only for people who are already in the program and want to change their coverage for the following year. Individuals turning 65 and coming into Medicare for the first time, get their own enrollment period — either around the time you turn 65, or throughout the time you have health coverage from your own or your spouse’s employment and for up to eight months after it ends. So if you miss your personal deadlines because you’re waiting for open enrollment, you risk delayed coverage and permanent late penalties. (Note: Different enrollment periods apply in some other situations, including when people qualify for Medicare due to disability.)
- Don’t count on receiving a notice from the government reminding you to sign up. Only people who already receive Social Security benefits get a Medicare reminder and become enrolled automatically. Everyone else must initiate the process with the Social Security Administration (the parent agency of Medicare) by making a phone call (800-772-1213), visiting a local Social Security office, or applying online on Social Security’s website http://www.ssa.gov/medicare/apply.html
- Medicare enrollment may be made as early as three months prior to your 65th birthday, and you should be enrolled no later than three months after your 65th birthday to avoid penalties.
- If you enroll in Medicare after 65, you’ll likely be charged 10% more for your Medicare Part B premiums for every 12-month period you were eligible for the coverage but went without it.
- If you decide to stay with your current plan, there is no further action required to renew it. Remember that if you don’t use this window of opportunity, you cannot make any changes to your coverage before October of next year.
- Keep in mind that Medicare isn’t part of the Health Insurance Marketplace established by the Affordable Care Act (also known as Obamacare), so you don’t have to replace your Medicare coverage with Marketplace coverage. No matter how you get Medicare, you’ll still have the same benefits and security you have now. The Affordable Care Act won’t require you to make any changes.
It’s important to know that Medicare plans can change from year to year, as can your health and budget needs. Understanding your options will help you make informed and confident decisions about your health care coverage. There are many resources available to help you do so, including the government’s website. www.medicare.gov.
Common Medicare Mistakes to Avoid
- Not enrolling in Medicare because you have existing health coverage: Too many people approaching 65 think they can skip signing up for Medicare if they already have private insurance. This can be a costly mistake. The only insurance that lets you delay Medicare enrollment is a group health plan sponsored by an employer with 20 or more employees. Other types of coverage, including COBRA, are not acceptable substitutes for Medicare. As mentioned above, if you’re supposed to enroll in Medicare but fail to do so when you’re first eligible, you can get charged with late-enrollment penalties.
- Assuming you don’t “qualify” if you haven’t worked long enough: There is a “threshold” qualification prior to enrolling and being required to pay additional fees. Each enrollee must have earned 40 credits of work through paying payroll taxes at work — about 10 years’ of work — ensures that you won’t have to pay premiums for Part A services (hospital insurance) when you enroll in Medicare. But you don’t need any work credits to qualify for Part B (doctors’ services, outpatient care, medical equipment) and Part D (prescription drugs). Provided that you’re 65 or older, and a U.S. citizen or a legal resident who’s lived in the U.S. for at least 5 years, you can purchase Part B coverage for the same premiums that everyone else pays. You might also be able to qualify for Part A benefits on your spouse’s work record, or you can pay premiums for them (the Part A premium in 2015 is as much as $407 per month, or about half that if you have 30 to 39 work credits).
- Thinking you must reach full retirement age before signing up: Full retirement age for most people is now 66. But to avoid late penalties you need to sign up for Medicare at age 65, unless you have qualifying alternate health coverage from your own or your spouse’s current employment. You don’t need to be collecting government retirement benefits to enroll in Medicare.
Don’t Forget to Use Your Preventative Care Benefits!
Medicare covers services including an annual wellness check-up, obesity screening, including counseling and smoking cessation counseling. In addition, many important cancer screenings, such as mammograms and colonoscopies, are also now covered by Medicare at no out-of-pocket cost.
It is important to understand that Medicare does not pay for long-term care. At most, Medicare covers 100 days of short-term rehabilitation that may take place in a skilled nursing facility. Individuals enrolled in a traditional Medicare plan, have certain “short term” care benefits. If you have been in a hospital at least three days, and thereafter are admitted directly form the hospital into a rehabilitation or nursing care facility for therapy and treatment, Medicare should pay the full cost of this short-term rehab stay for the first 20 days, and may pay part of the additional costs up to 80 days. During this time there is typically a per day deductible that you will be required to pay from your pocket.
Again, this is where the confusion arises, because if you enroll in a Medicare Managed Care Plan, for which the 3-day hospital stay may not be required, and for which the deductible for days 21 through 100 is waived, provided certain strict qualifying rules are met, this is a completely different “set of rules.” Nevertheless, under either program the nursing home resident must be receiving daily rehabilitative care and must be improving.
It must be reiterated that Medicare does not cover long care nursing home or even in home care. For nursing care coverage your best option is to plan ahead with a good estate plan, and/or try to enroll in a long term care insurance program.
As you are considering the Open Enrollment Period, this is an excellent time to consider your estate plan, which incorporates need for nursing home care, or incapacity planning. Contact the attorneys at Christensen Young & Associates for a no cost consultation at (801) 676-6447, or toll free at (866) 861-3333.