Deciding between Original Medicare and the Medicare Advantage program is an important first decision everyone needs to consider once they start their Medicare coverage. The two programs are completely different in how they are structured.  Your ability to access either program, personal health considerations, preference for either a fixed monthly budget or a variable monthly budget and the associated higher or lower premiums and access to doctors and/or hospitals can help determine which program you should use.  Let’s compare the two programs and list the pro’s and con’s of each.

There are three ways to sign up for Medicare.  You may use some or all of these ways depending on when you are registering for Medicare.

You can complete the enrollment forms and either drop them off at a local Social Security office or mail the forms to them, call Social Security on the phone and enroll over the phone or go onto the Social Security website and sign up on the website. Which of these methods you can use depends on when you are applying for Medicare. Included at the bottom of this article are links to the forms, Social Security contact page and online Medicare application at the Social Security website.

Here are three situations you may fall into.  Read through the one that fits your situation to determine which method you can use to apply for Medicare.

Because every individual is different, everyone is going to have a slightly different story about their Medicare enrollment. There are, however, a few types of scenarios and questions that seem to be more common. Many of our clients may be able to relate to Ginger’s experience, and how she decided to call Keys to Medicare for unbiased advice after a frustrating start with an insurance salesperson.

In order to find the best Medicare Supplement or Medicare Advantage Plan you need to do three things.    

First, you need to learn about the basics of Medicare we have put together a webinar about Medicare to explain how it works. Additionally, there are several articles posted on our KeysToMedicare blog to help. Annually Medicare publishes the Medicare and You book which covers the basics of Medicare. Medicare also has the website Medicare.Gov and has hundreds of articles listed to help explain how Medicare works and answer frequently asked questions.

People often change their Medicare Supplement plan for 1 of 3 reasons: in order to save money, match the level of coverage the policy provides to what they currently need or because they have moved.  Since Medicare supplement plans are month to month contracts you are allowed to change your coverage throughout the year.  You are not tied down to only making changes during the Annual Enrollment Period. However, after your initial enrollment into Medicare any subsequent changes for a Medigap or Medicare Supplement plan would require you to answer health questions and possibly complete a phone interview to see if you qualify for acceptance with the new insurance carrier. Sometimes a person’s health conditions prevent them from being accepted and able to switch to a new Medicare supplement plan.  Should that occur you may have to continue with your current coverage.

The most common reason for switching a Medigap

The most common reason for switching a Medigap (also called a Medicare supplement plan) is to get the same coverage with a different health insurance carrier at a lower cost.  Since the plan types are standardized it is common for a person to replace their current coverage with the exact same coverage from a different insurance company in order to save on their monthly premium. Typically, the process you need to complete in order to change your Medigap coverage would be to first apply for coverage with the new carrier and see if you are approved. The application for coverage with the new insurance carrier usually includes health questions.  These questions may ask if you have recently had a critical illness or have been diagnosed or treated for a chronic condition.  If you answer yes to any of those health questions the new insurance carrier typically declines to insure you.  If you answer no to all of those questions you may need to also complete a health interview over the phone with an underwriter from the insurance carrier.  Once you are approved with the new carrier you are then required to complete one final step.  A federal regulation states that only the insured is allowed to cancel their current Medicare coverage to ensure that you do not lose your health insurance coverage without your knowledge.  You must call the company for your old Medicare Supplement policy and notify them that you would like to cancel your old policy on the same date that you’re new Medicare supplement policy becomes effective. This two step process insurers that you are first approved for coverage with the new insurance company and only after being accepted with the new insurance company should you then call the customer service number for your prior coverage to cancel with your former carrier.

Sometimes…

Sometimes people will change their Medicare supplement plans when their health condition changes. Ideally a person in good health would start with a Medigap plan that offers less coverage and has a lower premium in order to match what they need.  Once a person’s health begins to change they would increase their coverage to match their health care needs and also likely increase their monthly premium. In practice this is very difficult to time. Because you are required to answer health questions and possibly complete a health phone interview in order to obtain new coverage there is no guarantee that your health will be good enough in the future to change your Medicare supplement plan. A long standing joke that I have told clients who want to start with less coverage is to call me – 3 months before they get sick – so that we can make sure that they can pass the medical underwriting and qualify to switch their coverage.  In practice, people typically start with the best coverage they can obtain right when they start Medicare. This eliminates the need to be able to medically qualify for new coverage  down the road since you may or may not be able to get new coverage based upon your health at the time.

Oftentimes…

Oftentimes people move out of state and out of their coverage area for their Medicare Supplement Plan – and typically their Prescription Drug Plan. Medicare allows you to have a Special Enrollment Period to change your Medicare supplement coverage (and possibly your prescription drug plan coverage) to a carrier that offers coverage in the area you have just moved to. The steps to replace your coverage when you move are to first notify your current insurance carrier of the date you are moving.  The insurance company will send you a letter if you are moving out of their coverage area, notify you your current insurance will terminate and you have the right to elect new coverage in the area that you are moving to. The letter documents your right to a special enrollment period and serves as a receipt. Oftentimes the new insurance company you enroll with will require you provide them a copy of the letter so that they can document with Medicare your right to switch coverage.   

Although there are other circumstances when you should replace your current Medicare supplement plan these 3 items are the most popular reasons we encounter.

If you have questions or would like us to advise you, please contact us. Complete the contact information below and we will be glad to help.

Medicare controls when you are allowed to change your current Medicare coverage during certain times of the year. In this article we are going to cover the following scenarios:

1. You have Original Medicare and want to change your Medicare Supplement and/or Prescription Drug Plan to another Medicare Supplement and/or your Prescription Drug Plan
2. You have Original Medicare and want to switch to Medicare Advantage
3. You have Medicare Advantage and switch to a different Medicare Advantage Plan
4. You have Medicare Advantage and want to switch to original Medicare, a Medicare Supplement and Prescription Drug Plan

Case 1: Original Medicare—Changing Your Medicare Supplement and/or Prescription Drug Plan

Your Medicare supplement can be changed anytime throughout the year as long as you can pass medical underwriting and be accepted with a different insurance carrier.  Medicare’s rules state that the first time you enroll in Medicare Part B you have a 6 month window to choose a Medicare supplement without having to answer underwriting questions. This allows everyone a fair chance to get whatever coverage they want no matter their current health condition.

Once you decide to change your Medicare supplement coverage the insurance carriers are allowed a chance to determine if they want to insure you or not.   If your health prevents you from being accepted by a new insurance carrier you are guaranteed to be able to keep your original Medicare supplement coverage for life as long as you continue to pay the monthly premiums.

If you are able to switch your Medicare supplement coverage there a couple of steps you need to take.  First, you apply with the new insurance carrier.  Only after you are accepted by the new Medigap plan should you call to cancel the coverage from your old Medigap (or Medicare Supplement) plan.

Again, the regulations allow you to switch your Medicare supplement coverage throughout the year as long as you can pass the medical underwriting questions.

Because Medicare heavily subsidizes the Prescription Drug Plans on an annual basis they do not want you to switch your coverage mid-year.  You are only allowed to switch your Prescription Drug Plan during the annual enrollment period from October 15th through December 7^th.   During the annual enrollment period you are allowed to pick a plan for the following calendar year. Your current coverage continues up until midnight on December 31 and the new coverage begins on January 1st.

By enrolling in a new prescription drug plan Medicare knows to automatically cancel your previous coverage the following January 1^st.  You do not need to call to cancel that coverage. Medicare will cancel the coverage for you automatically.

Case 2: Switching from Original Medicare to Medicare Advantage

If you currently have Original Medicare, a Medicare supplement and a prescription drug plan and want to switch to a Medicare Advantage plan you need to make that change during the annual enrollment period from October 15^th – December 7^th.  Your new Medicare Advantage plan will begin to cover you on January 1^st of the following year.

In order to switch to a Medicare Advantage plan there are no health underwriting questions.  You simply need to complete an application for a Medicare Advantage plan and that plan becomes effective on January 1^st.  Because Medicare either subsidizes a Prescription Drug Plan or a Medicare Advantage Plan for each person they will know to automatically cancel your current prescription coverage for you on January 1^st—no need to call anyone.    

You will need to call your Medicare Supplement insurance carrier and notify them that you will be cancelling your coverage on January 1st.  Medicare does not notify the Medicare Supplement insurance carrier and leaves that responsibility to you.

Case 3: Medicare Advantage plan changed to a different Medicare Advantage plan

Medicare heavily subsidizes the Medicare Advantage insurers on an annual basis.  Because of this they only allow you to switch your Medicare Advantage coverage to a different carrier during either the annual enrollment period from October 15^th – December 7^th or the open enrollment period between January 1^st – March 31^st.  If you change your coverage during either of these time periods your prior Medicare Advantage coverage will be automatically cancelled when the new plan becomes effective.  You do not need to call or do anything to have the prior coverage cancelled.

Case 4: Switching from Medicare Advantage to Original Medicare

If you currently have a Medicare Advantage plan and would like to switch to Original Medicare, a Medicare Supplement and Prescription Drug Plan there are two steps that you need to take. The first step is to apply with a Medicare Supplement Insurance carrier during either the annual enrollment period from October 15^th – December 7^thor during the open enrollment period from January 1^st – March 31^st to see if you are accepted for coverage.  Once you are accepted for coverage with a Medicare Supplement Insurance carrier you can then enroll with a Prescription Drug Plan electing the same effective date as your Medicare supplement.

You need to switch your coverage in that order (first Medicare Supplement then Prescription Drug Plan) since you first need to know if you will be accepted in to the Medicare Supplement plan.  Getting into the Prescription Drug Plan is guaranteed for everyone during those two enrollment periods so that will automatically occur. 

Enrollment into a Prescription Drug Plan will automatically cancel your Medicare Advantage plan coverage on the effective date that you have chosen.  

Medicare allows people to switch from Medicare Advantage to original Medicare during the open enrollment period from January 1 to March 31 in order to give people a second opportunity during the year to make this change. If you are accepted by a Medicare Supplement insurance carrier you are given the opportunity to elect a prescription drug plan to replace your Medicare Advantage plan during this time period.

If you have any further questions, please don’t hesitate to contact us.  We are happy to assist you.

Note that you don’t necessarily need to sign up for Medicare when you turn 65. It just depends on how you are currently getting your health coverage and what health insurance options are available to you. That’s why the notice about getting penalized if you don’t sign up for Medicare may or may not necessarily apply to you.

Having spent almost 20 years as a Medicare broker advising people how best to get their health insurance coverage, I know there is a lot of confusion about the rules governing if you need to enroll into Medicare. This post explains what to do for several different situations.

To find the rules specific to your situation, scan each subheading below to find the situation that fits you. Each section gives you a quick overview of what to expect moving forward, whether on your own, or with a Medicare advisor—like our process at Keys to Medicare. There are also helpful tips and a couple additional follow-up questions at the end of this article, as well as our contact information, in case you would like to reach out to us directly. We are here to help, and there’s never any cost to consult with us!

You are currently on individual insurance

You need to transition onto Medicare at age 65. Medicare has stated that individual coverage does not count as creditable coverage past age 65. That means if you delay enrolling into Medicare, you will incur a late enrollment penalty.

Some individual health plans acknowledge this rule and help you by automatically terminating coverage at age 65 because they know you’ll need to transition onto Medicare. However, if you are on ACA, or Obamacare, it does not automatically terminate. In those situations, you need to call your current insurance carrier and request your coverage terminate the same day your Medicare starts. For more information, here is a link to the Marketplace webpage that describes transitioning onto Medicare. 

You are a federal employee

You need to transition onto Medicare. Please contact the federal employee benefits center in order to find out how to elect Medicare as your primary coverage. Your federal employee benefits will become your secondary coverage. Please note that there are different rates for non-Postal employees then for Postal employees. Currently, some public options are better priced than the non-postal options – it is a good idea to see a comparison of those options in order to determine which would be better for you.  Contact us to go through those options.  There is a great comprehensive website for federal employees linked here.

You have VA benefits

Most people with VA benefits are not required to also sign up for Medicare. You can just stick with having VA coverage. The VA website here can help explain how VA coordinates with other insurance. Of course, if you want an outside option to the VA, then you may also enroll into Medicare. However, there are several things to consider when trying to maximize your benefit from both programs.

First, it’s nice to know if you decide to sign up for Medicare at a later time you will not incur a late enrollment penalty for that time period between age 65 and when you enroll. This happens because the VA is considered creditable coverage, so you can actually skip enrolling at age 65 and still be penalty-free. That being said, Medicare does make you wait until the annual enrollment period between October 15 – December 7 to enroll. Then your coverage starts on the following January 1. 

Because Medicare severely limits the time when you can enroll into Medicare, we find most people with VA benefits want to have an outside health option that will cost them very little in terms of monthly premium so they can also have that coverage. Other individuals with VA prefer seeing outside doctors, so they try to optimize their Medicare coverage based upon how often they see doctors or use the services. It’s just a matter of finding the right balance for you and your lifestyle. 

You or your spouse are still working and have employer insurance

If you or your spouse have employee benefits, then you really have the best of both worlds. You can choose to either stay on your employer’s coverage or you can go onto Medicare—whichever is better for you.

We advise that you first check with your employer to make sure that it is considered creditable coverage with Medicare and that you are allowed to stay on past age 65. Once your employer confirms that, you can then determine whether your employer coverage is more economical for you or if Medicare would be the less expensive option. It is always important to compare the premium for either option, plus the additional costs that you will incur (e.g., drug co-pays, deductibles, etc.).

If you decide to stay on your employer plan, you do not need to notify Medicare of your choice. Medicare states that you only need to contact them about 2 to 3 months before your retirement in order to begin the transition from your employer health coverage to Medicare. At that point, there are currently 2 forms you would need to complete. These forms notify Medicare that you have had creditable coverage through your employer (or your spouse’s employer) and you need to start your Medicare coverage because your health insurance is going to terminate.

Oftentimes, people add Medicare Part A as secondary insurance to their group coverage if they decide to stay on their group plan. This makes sense if you work for a company that has more than 20 employees insured because Medicare would be your secondary coverage. Plus, since Part A is free, it could help with a hospital claim and possibly save you from having to pay a large deductible. You’ll just need to consider whether you’re doing this in addition to having an HSA or Health Savings Account. If you go onto either part of Medicare and continue to have a health savings account, you are no longer eligible to make contributions to that account. The tax savings from those contributions usually outweigh the potential benefits from having Medicare Part A as your secondary coverage, so you’ll want to run the numbers from all angles. Talking with a Medicare advisor can also help you make sure you’re getting the right deal.

Of course, if you do not have a Health Saving Account, you’ll still have the option to add on Part A. Yet we typically recommend that people do not additionally start their Medicare part B since there is a cost associated with this coverage. Additionally, it may limit your enrollment options when you go completely onto Medicare. Also, we strongly advise that if you work for a small employer (an employer with less than 20 employees) you contact us to discuss your situation in detail since there are several other factors to consider.

You don’t currently have any health insurance

If you’ve been living without health insurance, then you need to sign up for Medicare when you turn 65. Federal regulations state that individuals age 65 or older need to have some form of creditable health insurance coverage. If you do not and decide to go onto Medicare at a later time, then Medicare will penalize you for that period of time which you did not have creditable coverage.

Since Medicare strives to be an affordable health option for any individual over age 65 there is really no reason to go without health insurance past age 65. For those people who need financial support, there are several programs available to help pay for any premiums or co-pays that you experience. Also, there are several non-profit organizations that assist people in need, as well as programs run by hospitals, pharmaceutical companies and communities for individuals who qualify. Please don’t delay in getting the coverage you need!

Common Questions

What happens if I stay on group insurance and transition to Medicare when I retire?

About 2 to 3 months before you retire, you will need to notify Medicare that you want to begin your coverage. Medicare always begins on the 1st of the month, so you will need to coordinate which month you would like it to begin according to the termination of your employer health coverage. Typically, people are either adding Part B and Part D to their coverage, or they need to add parts A, B, and E to their coverage. There are 2 simple forms to complete and turn into the Social Security office to begin that transition.

For additional information that outlines the above topics please also see the webpage on the Medicare website linked here. And if you don’t know where to start, or you have questions about your existing coverage, please know that Keys to Medicare is here to help! Visit our contact page to learn more about how to get it touch. We would be happy to answer your questions so you can make a confident decision about your healthcare coverage.

Should I just sign up for Part A and Part B to make sure that I won’t be penalized?

Oftentimes, people will sign up for Part A but NOT Part B if they continue with their group insurance.  The criteria used to determine whether you should add on Part A are:

1. You are on a large group plan that is considered your primary insurance and then Medicare is your secondary insurance. A large group plan is defined as a group that insures more than 20 people.
2. You are NOT on a HSA. If you are on a Health Savings Account and elect either Part A or Part B of Medicare then you are no longer allowed to make contributions to your HSA. Oftentimes, people on HSA’s want to continue making contributions or perhaps their employer makes contributions, so they will not sign up for Medicare Part A.
3. Your group insurance should be “creditable coverage.” That term means that your group insurance has prescription coverage that meets Medicare’s minimum guidelines.  Satisfying that criteria means that you would not have a late enrollment penalty when you come off the group insurance and go onto Medicare. 

You should NOT sign up for Part B if you are going to continue on group insurance.  Part B has an expense with it every month that adds to the total cost of your insurance.  In addition, once you elect your Part B coverage you have a window of six months to sign up for either a Medicare Supplement without having to answer medical underwriting questions or three months to elect either a Medicare Advantage plan or a prescription Drug Plan.  After those windows expire you are only allowed to enroll during the annual enrollment period.  So, much better to wait to enroll into Part B once you come off your group insurance and go solely onto Medicare. 

What is the Medicare penalty for not enrolling?

If you do not have creditable coverage after the age of 65 there is a lifelong penalty for Medicare Part B and Medicare Part D. 

The Medicare Part B penalty is 10% of the monthly premium for Part B times the number of years that you went without coverage.  This penalty is added to your monthly premium every month for the rest of your life.

The Medicare Part D penalty is 1% of the national average premium per month times the number of months that you went without coverage.  This penalty is added to your monthly premium every month for the rest of your life.  

Do I need to notify Medicare if I am staying on group insurance?

No, you do not need to notify Medicare that you are going to stay on your group insurance and will not enroll right now.  When you decide to transition to Medicare there are two forms that you will need to complete. 

The first form confirms that you have had health insurance and that the prescription portion of that coverage was considered creditable coverage. 

The second form states that your group coverage is going to terminate and states the date it will terminate and so you are requesting that your Medicare begin.  Note that you can have your Medicare begin on the first of any Month so most people will have their group insurance carry them through the end of the prior month in order to not have any lapse in coverage.

TIPS:

1. Enrolling into either a Medicare Supplement and Prescription Drug Plan or a Medicare Advantage plan has the same premium whether you call the insurance carrier directly or go through an insurance broker. Since it costs you nothing extra – use an insurance broker that specializes in this area.  You can take advantage of their experience and expertise for free.
2. Have someone review your coverage annually. Prices change year to year and sometimes dramatically.  Take advantage of the free service some brokers offer.
3. If you have questions reach out and ask for help. It’s a big program that has a lot of rules and regulations that you may not be familiar with.  Make sure that you are going to make a mistake or get penalized because of a rule or regulation you were not familiar with—call an expert for help.