If you're approaching the Medicare enrollment age, then you may think that the transition from your current insurance onto Medicare is an automatic process. Unfortunately, this isn't the case, and there are a number of steps that you will have to take to both begin your Medicare coverage and to ensure that the coverage you'll receive is affordable and fits your needs. One of the best things you can do is to arm yourself with as much knowledge as possible before your enrollment so that you can make the right choices when the time comes. Keep reading to discover four important facts about Medicare coverage that you (probably) didn't know.
Medicare Isn't One-Size-Fits-All
Many people who aren't familiar with the Medicare system believe that it is a single government program that provides uniform coverage to all enrollees. In fact, Medicare is broken up into a number of separate parts and the components of Medicare that you will use will vary depending on your particular needs and budget. Original Medicare is made up of Part A and Part B, which together provide coverage for catastrophic health issues as well as routine visits. This coverage does not include prescriptions, however, which are instead covered under Part D. While all enrollees get the same coverage under Parts A and B, Part D plans are privately administered and their coverage varies between providers.
Additionally, you have the option of foregoing Original Medicare coverage and instead choosing a Medicare Advantage plan. Medicare Advantage plans are administered by private companies that are required to meet certain minimum coverage requirements. These plans generally offer similar coverage to Parts A and B, but they may also include extras such as dental or vision. Most Advantage plans come with their own Part D coverage, but in some cases, you will need to purchase that separately. Advantage plans can sometimes be cheaper than Original Medicare, but the coverage also varies.
Waiting Can Lead to Hefty Penalties
Parts A, B, and D of Medicare all impose hefty penalties if you fail to enroll when eligible. Many people are automatically enrolled for Parts A and B, but Part D enrollment is never automatic. For Part D, the enrollment penalty increases for each month that you were eligible for enrollment and continued without coverage. This penalty is applied to your premium if and when you do decide to sign up for a Part D plan, so it is only relevant if you ultimately decide to enroll. Most people will eventually require prescription coverage, however, so waiting is rarely advantageous.
You Can Change Your Mind
While you will suffer late fees for choosing not to enroll in Medicare at all when you are first eligible, you are free to switch Medicare plans without penalties during open enrollment. Open enrollment periods occur once per year, and during that time, you can choose to trade your Original Medicare plan for a Medicare Advantage plan or switch back to Original Medicare from Medicare Advantage. You can also switch to a different Part D drug plan during this time. Many new enrollees spend a large amount of time worrying about choosing the right plan, but it is important to remember that you aren't stuck with your first choice. If you aren't happy with your coverage after your first year, switching can be done easily and with no penalty.
Medicare Isn't Mandatory if You Are Working
While there are serious penalties to pay for late enrollment, a special exception is made for anyone who is currently covered by an employer-sponsored healthcare plan. If your employer is providing you with healthcare and you would like to keep that coverage, then you are free to skip Medicare enrollment for as long as you are covered. Once your employer-sponsored coverage ends, you will have an eight-month grace period (called a special enrollment period) to sign up for Medicare before late enrollment fees start stacking up.
Once you know what you want from your Medicare plan and you have chosen an option that fits your budget, it is important to act quickly. Waiting to enroll in Medicare is a costly mistake that many retirees make, but it is also a mistake that is easily avoidable.
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