In the U.S., reaching 65 is synonymous with becoming Medicare-eligible. Medicare is a national health insurance program started in 1965. It was created and administered by the U.S. government and is funded mainly by payroll taxes.

At its inception, “Original Medicare” covered hospital stays (Part A) and other expenses like doctor fees (Part B). Over the years, Congress added additional Medicare components:

• Part C – Also known as “Medicare Advantage,” private insurers provide Parts A, B and D coverage according to government regulations.
• Part D – Covers prescription drug costs. Private companies provide this benefit.

This brief description is but the tip of the iceberg. There is a lot more information you need to know to be a savvy Medicare beneficiary.

Is Medicare Mandatory?

Most of us have increasing medical needs as we age, so it makes sense to have health insurance. The U.S. government thinks so, too. Therefore, Medicare sign-up is mandatory. In addition, private health insurers depend on their policyholders 65 and older signing up for Medicare, so the insurers don’t have to cover 100% of health claims.

Should I Sign Up for Medicare?

The answers to these four questions can serve as a guide in determining if you should sign-up for Medicare.

1. Have you turned 65? If so, most people need to sign up for Medicare Parts A and B. However, there are some exceptions.
2. Are you 65, still working, and covered by an employer health plan? If not, you would be required to sign up for Parts A and B. Otherwise, go to Question 3.
3. How many employees for the employer providing health insurance? If it is under 20 employees, signing up for Parts A and B is required at age 65. For organizations with 20 or more employees, go to Question 4.
4. Does the employer’s health plan meet or exceed what Medicare provides? If not, you must sign up for Original Medicare (Parts A and B). On the other hand, if the health insurance plan DOES meet Medicare requirements, it provides “creditable coverage.” This means you can put off signing up for Medicare until employer coverage no longer applies.

How Do I Sign Up?

Most people don’t know that signing up for social security benefits also serves as enrollment for Medicare Part A and Part B. Otherwise, you can either click this link to Medicare.gov and follow the prompts for more information or call Social Security at 1-800-772-1213.

When Do I Sign Up for Medicare?

Initial Enrollment Period

This is a seven-month period that begins three months before the month of turning 65.

Special Enrollment Period

You may not sign up during the Initial Enrollment Period because you are covered under employer health insurance. The Special Enrollment Period lasts for eight months after employer coverage ends.

General Enrollment Period

This is for those who did not sign up for Medicare during the Initial Enrollment Period and are not eligible for a Special Enrollment Period. The General Enrollment Period occurs between January 1 through March 31 each year, with coverage starting on July 1 of that year.

Part D Enrollment

Medicare Part D covers prescription medications, but it is optional, unlike Parts A and B. However, sign-up occurs during regular Medicare Initial Enrollment or General Enrollment if you choose to have this coverage. Note that prescription drug coverage can also be obtained through Medicare Advantage Plans (see below), which have their own enrollment period.

Enrollment in Medicare Advantage Plans

Also known as Part C, private health insurers “bundle” Parts A, B and D according to Medicare rules. Enrollment for these plans occurs annually from January 1 – March 31. Beneficiaries with a Medicare Advantage Plan can switch to a different one or change to Original Medicare during this time.

What If I Don’t Sign Up?

There are penalties for not signing up for Medicare on time. The list can be found at Medicare.gov.

What Does Medicare Cost?

Medicare Part B and Part D both have monthly premium costs, but Part A does not. Also, Medicare coverage has deductibles, copays and coinsurance. Details for all of these costs can also be found at Medicare.gov. Medicare Advantage Plans have their own pricing policies.

One of the problems of Original Medicare (Parts A and B) is no limit on out-of-pocket expenses. These “gaps” in coverage can be expensive. As a result, private insurance companies offer Medicare Supplement Insurance, otherwise known as Medigap coverage. These plans have extra premiums on top of other Medicare premiums but help fill in some of the gaps. Note that Medigap is only available to supplement Original Medicare and cannot be used with Medicare Advantage Plans.

Some people cannot afford Medicare’s premiums, deductibles, copays or coinsurance. However, several programs are available to help pay these costs, like Medicaid, the Medicare Savings Program and the Extra Help program that helps with Part D prescription drug expenses.

Medicare is an excellent program for those over 65, but it can be complicated. Hopefully, this brief introduction throws some light on a complex subject. Look for my future blog posts on Sixty and Me for even more valuable details about Medicare. For an even deeper dive, check out my Medicare eBook at Living50+.

Let’s Have a Conversation:

Are you near 65? Have you looked into Medicare and which part of it will work for you? Have you already signed up for Medicare? What issues did you encounter and how did you resolve them?