You might have read the above headlines and thought “Oh, fun! A date!” It’s a trap, but I make no apologies, as I needed to say something other than “Medicare” to get your attention. Now that I have you, I hope I can keep you a little longer.
With all things governmental, there are special dates that must be observed. April 15th for taxes. December 31st for year-end. Turn 18 and you can vote. Medicare also has dates, but luckily there are ranges that give windows of opportunities to add or make changes to Medicare choices. Since we are now at the beginning of one of those windows, I thought it would be helpful to understand what they mean and why you might be interested in the opportunities afforded.
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What are those letters again? Here is a quick primer of Medicare parts:
Part A covers hospitalization and is generally available to you at no charge.
Part B covers doctors and has a monthly premium that can be increased/decreased each year based on your modified adjusted gross income.
Part C is Medicare Advantage, which includes Parts A and B and sometimes Part D, but plans are limited to your local area and resemble HMOs or PPOs. There is a premium that is based upon the plan options you choose. Part C is provided through a Medicare-approved private company and might also offer vision and dental coverage.
Part D covers prescriptions and has a monthly premium.
As a rule, you will file for Medicare Part A at age 65 since there is no cost to you if you are a covered worker. Also as a rule, you will file for Medicare Part B and Part D at age 65 or when you lose creditable employer coverage, whichever comes last. Why the difference? While you are covered at work, there is no need to additionally pay the Medicare premium for Part B and D. This applies if your company has 20 or more employees, so check with your HR department to verify before you delay.
So, what are the special dates for Medicare?
Initial enrollment period (for all parts): seven-month period of first eligibility, which includes the three months prior, the month of, and the three months after your 65th birthday.
Special enrollment period (for all parts): eight-month period starting the month after your employment ends or your current employment group insurance ends. Note this does not include COBRA coverage or retiree health plans, as these are not considered current employee coverage.
General enrollment period (if you didn’t sign up during the initial or special enrollment periods): January 1st through March 31st each year. Coverage will start July 1st, and premiums could be higher if you didn’t sign up when you were first eligible.
Open enrollment period (Parts C and D): October 15th through December 7th each year. This period allows you to add Part D if you didn’t when you first enrolled in Medicare (there could be a higher premium), switch from Original Medicare (Parts A and B) to Medicare Advantage (Part C) or back if you started with Part C, switch from one Part D plan to another Part D plan, or drop your Part D coverage completely.
As you can imagine, there are plenty of “if this, then that” scenarios involved with Medicare. If you fail to obtain coverage in a timely manner, premiums can be permanently increased and you might find yourself without coverage for a period of time. But if you are observant of the important deadlines and are timely in your actions (this is where your wealth strategist can help), you can successfully navigate your dates.
Kathy Williams, CFP, CDFA, is Principal and Senior Wealth Strategist at Waddell & Associates.