Are You Ready For Medicare?
“Age is not a particularly interesting subject. Anyone can get old. All you have to do is live long enough.” – Groucho Marx
During the next five years, at least 1 of every 8 physicians and employees associated with MedAmerica will turn age 65. For many, this may mean the onset of retirement. For others, it’s just an age milestone and no reason to stop working. Regardless of your attitudes about turning 65, it is the time you must apply for Medicare benefits and, as with any government bureaucratic process, there is no small amount of confusion that accompanies this process. As I am increasingly answering more questions on Medicare, I thought that a summary of the application process might be helpful to those of you who literally wish to stay young at heart.
As
you read this article, the fact will remain that, as long as you are working
and covered by a group health plan, it makes little sense to apply for Part B,
C, or D insurance. However, you must
apply for Part A at age 65 even if you are still working.
Introduction
Medicare is the Federal health insurance program for Americans age 65 and older. On reaching age 65, qualification is automatic. Medicare has four parts, hospital insurance (Part A), supplementary medical insurance (Part B), private MediGap insurance (Part C), and prescription drug insurance (Part D).
Part A (Hospital Insurance) covers services associated with inpatient hospital care. As long as you have worked more than 10 years, there is no monthly premium. The deductible for Part A coverage is now $992 per year.
Part B (Medical Insurance) covers services associated with outpatient care, including lab tests, physical therapy, and ambulance services. Premiums are variable dependent on your income. The annual deductible for Part B are $131 in 2007.
Part C (private MediGap Insurance) are privately purchased insurance plans that provides for services not covered by Part A and Part B (lengthy hospital stays, specific disease coverage, long term care). Premiums vary by plan.
Part D (Prescription Drug coverage) provides an initial level of drug coverage for everyone but enrollment is voluntary. Premiums are dependent on which drug plan you choose.
Signing Up for
Parts A & B
Signing up for Medicare is a little like successfully navigating a maze. The best time to sign up for Medicare is the three month period prior to the month you turn 65 because it may take you that long to complete the application and because there are penalties associated with delaying (the “snooze you lose contingency”) your enrollment. However, you have until three months after you turn 65 to actually sign up. If you do not sign up during this period, any premiums that you ultimately pay will be higher than the standard rates. You can sign up on the web by going to the Medicare website at www.medicare.gov/medicareeligibility/home.asp. For assistance, you may phone the social security administration office and set up a very helpful appointment with a Medicare specialist.
In the past, signing up for Medicare coincided with signing up for Social Security. However, because eligibility for Social Security is increasingly being delayed for individuals born after 1938, more and more people will have to sign up for Medicare before they are eligible for social security benefits.
Follow closely here…If you have already signed up for Social Security, you are automatically enrolled in Part A of Medicare. You will automatically receive your Medicare card, along with some other information, in the mail. You do not need to further enroll when you turn 65. However, and here’s where it gets complicated, if you wish to enroll in part B, especially if you are no longer working, you must enroll within three months of turning age 65 or within eight months of losing any group health insurance.
Important Dates to Remember 3 months prior
to 65th Birth Month: Earliest date to sign up for
Medicare Parts A, B, and D. If you have Social Security, Part
A is automatic. 65th
Birth Month: The month in
which you turn age 65 3 months after
65th Birth Month:
If you are no longer working, this is the last date to sign up for
Medicare Parts B & D without incurring future premium penalties. 8 months after
65th Birth Month:
Upon terminating your work group insurance, this is the last date to
sign up for Medicare Parts B & D without incurring future premium
penalties. 6 months after
signing up for Part B: After
you begin paying for Part B, this is the last date to sign up for a MediGap plan without risking future denial for certain
medical conditions.
If you do not have Social Security, you must sign up for Medicare either three months prior to the month in which you turn age 65 or three months after the month in which you turn age 65. That’s a seven month window to enroll. Again, if you choose to enroll in Part B, you must enroll within that seven month window or within eight months of terminating your group health insurance.
Premiums for Part B are dependent on your income. The higher your income, the more you pay in premiums. Typical monthly premiums range from approximately $100 per month for the income group earning below $80,000 to around $175 per month for an individual earning over $200,000. Income is determined by looking back two years prior to the time of application. The premiums are adjusted annually for health care inflation.
If you do not sign up for Part B when you sign up for Part A and you are not working or covered by group health insurance, you can sign up at a later date but the premiums associated with Part B will increase by an amount related to the delay (generally a monthly premium penalty of $6 to $15 per year of delay). However, if you are still working past age 65, you have until 8 months after you stop working to sign up without an increase in premiums. So, for all of you who dream of working into your 70’s, you will not be penalized for delaying your enrollment in Part B!
Once you have signed up for Medicare, you will receive a Medicare card within 6 weeks of submitting your application. The card will reflect your participation and eligibility by Part. For instance, if you only sign up for Parts A and B, your card will show “Part A” and “Part B” but it won’t show “Part D”.
Part D
Prescription Coverage
If you think signing up is complicated, wait until you see what they did with prescription care coverage. The bureaucratic pens were out in full force when they designed this piece of legislation. There are variable deductibles, a Donut Hole,
Every American, regardless of income, is eligible for prescription coverage. To participate however, you must choose from several private plans pre-approved by Medicare. Premiums range from about $10 per month to $50 per month depending on the type of plan you choose. You must be age 65 but you cannot be denied for health reasons.
During 2007, you will
pay: 100% of charges up to $265 25% of charges on the next
$2,135 of drug costs 100% of charges on the
next $3,850 (the “Donut Hole”) 5% of charges thereafter These amounts are adjusted for inflation annually.
Here’s how the basic prescription coverage works:
Unless you purchase a plan that provides coverage for out of pocket costs, Medicare’s basic prescription drug plan has an initial deductible of $265 and various copayments thereafter until you reach approximately $5100 in out of pocket costs. However, drugs purchased outside of your plan’s formulary do not count toward your out of pocket costs.
Each plan offers a formulary with a list of drugs that are covered by the underlying plan. If you purchase drugs not included in the formulary, you will pay the full cost of the prescription. If you have a set of prescriptions that you currently use, you should check with the prospective plan to see if they cover those particular drugs. There are several websites which can help you with your selection but the Medicare website is a good place to start (www.medicare.gov/pdphome.asp). As an additional note and for convenience, you also want to check out the pharmacies that are contracted with your prospective plan.
Signing up for Part D is very similar to Part B. You must first apply during the seven month window that surrounds your 65th birthday. Just like Part B, if you delay your enrollment, the amount of your future premiums will be increased proportionate to the delay in signing up. If you don’t like your existing plan, you are permitted to switch plans every December during an open enrollment period.
Part C –
Supplemental (MediGap) Insurance
Supplemental Insurance provides insurance coverage for medical claims that aren’t covered by Medicare. While MediGap policies provide coverage for hospital stays, skill nursing facilities, foreign travel emergencies, and other claims that Medicare does not cover, they no longer provide prescription drug assistance. The important thing to remember here is that upon signing up for Part B, you have six months to purchase a MediGap policy where your health is not a factor for insurability. If you do not purchase a MediGap policy within 6 months of part B participation, insurance companies can reject your application for certain medical conditions. You can choose from 12 different policy options, each with varying degrees of coverage, from a wide variety of insurers. Once you enroll, you will receive a Supplementary Insurance card from the provider.
Resources
In talking with other physicians who have gone through the Medicare application process, the words “ordeal”, “confusing”, and “trying” have been used. Like death and taxes (no pun intended), applying for Medicare is a virtual certainty if you get old enough. However, those same physicians highlighted the cordiality and efficiency of the Medicare personnel when applying in person. To apply in person, simply call the Social Security Administration at the number shown below and arrange an appointment. They’ll take you through the entire process and get you signed up with very little confusion.
I hope that this article has at least highlighted some of the basics associated with the Medicare application. I know that everyone seems to have a different situation regarding their eligibility. You can refer to a number of websites for specific instances that perhaps apply to you. I have listed those resources below. Although I have not personally gone through the process, if you call me, I’ll do my best to help you.
American Association of Retired Persons – www.aarp.org
Medicare – www.medicare.gov or (800) MEDICARE
Medicare Information Booklet – www.medicare.gov/Publications/Pubs/pdf/11036.pdf
Medicare Personal Plan Finder – www.medicare.gov/MPPF/home.asp
Social Security Administration – www.ssa.gov or (800) 772-1213
MedAmerica Financial Services – (800) 842-2808