Transitioning to Medicare
If you are about to turn 65 and are transitioning to Medicare coverage, hopefully this guide will help out.
If you are eligible for Medicare because you are already getting benefits from Social Security, you’ll get Medicare Part A and Part B automatically when you first become eligible and don’t need to sign up. Medicare will send you a “Welcome to Medicare” packet three months before you turn 65.
When to apply for Medicare
Your initial enrollment period begins three months before the month of your 65th birthday and ends three months after.
If your birthday is on the first, however, your enrollment period will begin one month early.
So, for example, if your birthday is July 1 your initial enrollment period will begin on March 1. You’ll enroll online or contact Social Security for Medicare Part A and B.
It’s very important to remember to sign up for Medicare when you first become eligible because if you forget and your Medicare Part A coverage starts you’ll lose any tax credit or other costs associated with your Marketplace plan and have to pay full price.
There are also late enrollment penalties associated with Medicare.
If you do not enroll in Part B during initial enrollment, you’ll pay a late enrollment penalty. The penalty is an additional 10% of your premium for every 12-month period you should have had Part B. That 10% is applied each month for as long as you have coverage.
If you do not qualify for free Part A coverage because you didn’t work long enough to be eligible and you miss your enrollment period, you’ll pay an additional 10% of your premium for twice the number of years you didn’t have coverage.
Part D coverage
You’ll also want to decide if you want help with your prescription drug coverage too.
Medicare Part A and Part B do not offer this kind of coverage.
Part D plans are only available as standalone plans or as a part of a Medicare Advantage plan.
If you don’t get Part D coverage, miss your initial enrollment period, and decide you want coverage later, you’ll pay a late enrollment penalty if you did not otherwise have creditable coverage. The penalty is an extra 1% of your premium each month for as long as you have coverage.
When you first become eligible for Medicare, you will also want to consider getting a Medicare Supplement plan.
These plans kick in to cover a certain percentage of the healthcare costs left behind by Original Medicare. Some even cover 100%.
The absolute best time to buy a Medigap plan is when you first become eligible. You can buy them anytime after you become eligible, but then you will be subjected to medical underwriting. If you apply when you’re first eligible, you are not allowed to be asked any health questions and are guaranteed issue.
You are eligible for Medicare Supplements when you are 65 or older and are enrolled in Medicare Part B. Your open enrollment, guaranteed issue period lasts for six months after you are first enrolled in Part B.
Remember to cancel your Marketplace coverage
If you’re the only person on your Marketplace plan, you’ll want to cancel the whole application.
If you and your spouse or other household members are enrolled on the same plan, but you’re the only one eligible for Medicare, you’ll cancel coverage for just yourself. This way any others on the plan can keep their current coverage.
Don’t forget this step. If you do, once your Part A coverage begins you’ll lose any tax credits or other cost savings for your Marketplace plan and you’ll be on the hook for the full cost.