Each year, October 15–December 7 marks the Medicare open enrollment period. Available to Americans age 65 or older, Medicare is the government healthcare plan for retirees. If you’re eligible to enroll, it’s important to consult with your financial advisor and your trusted medical providers about key dates, the provisions of various aspects of Medicare, your requirements for prescription drugs and other special needs, and related programs like Social Security that can also have a big impact on your retirement planning. Let’s cover a few main points that will help you make some initial decisions about this vital aspect of your retirement.
First, some basic resources. These free websites can provide you with helpful information to get you started:
- Medicare & You: The Official U.S. Government Medicare Handbook (available online at https://www.medicare.gov)
- Enrolling in Medicare: Your Comprehensive Checklist (available online at https://www.healthline.com)
- Medicare Resource Center (available online at https://www.aarp.org)
When to Apply
Most persons age 65 should apply during their initial enrollment period, which runs from three months prior to their 65th birthday to three months afterward. Failure to enroll when you reach the age of eligibility could result in penalties in the form of higher monthly premiums when you do eventually enroll. An exception to this applies to persons who are already covered by another healthcare plan that provides “creditable coverage.” Typically, creditable coverage is considered to be provided by a plan that offers benefits equal to or better than those provided by Medicare. Generally speaking, employers with 20 or more employees, as well as certain government employers and organizations, offer coverage that meets these requirements. If you work for such an employer and are age 65 and otherwise eligible to enroll in Medicare, you may be exempt from the penalties for deferred enrollment.
In fact, this is an important consideration for persons who otherwise qualify to enroll for Medicare but whose spouses are younger and covered by the older spouse’s employer-sponsored health plan. If your spouse’s health insurance coverage is being provided through your employer, it may not be to your advantage to enroll in Medicare and drop your other coverage until your spouse qualifies either for Medicare or other coverage. You should discuss your post-retirement medical insurance options with your employer’s human resources department; some larger employers offer special plans for retirees and their spouses. If you are approaching the age of eligibility for Medicare and are unsure whether your employer offers “creditable coverage,” you should ask for a notice of creditable coverage. If your employer cannot provide such a notice, you should enroll for Medicare during your initial enrollment period in order to avoid penalties later.
What You Need to Enroll
If you have decided to enroll, here’s what you’ll need to provide:
- Birth certificate (unless you are already receiving some form of Social Security benefit);
- Proof of citizenship or permanent residency if you weren’t born in the United States;
- Income statements, W2, or other tax forms (proof of work history);
- Discharge papers or other records of military service, if applicable.
You can enroll online or at your local Social Security office.
What You Need to Know
As you prepare for your enrollment in Medicare, there are some basic questions you’ll want to ask, including:
- Does my primary care physician accept Medicare?
- What is covered by Medicare?
- Part A, or “basic Medicare,” covers most hospitalization costs. It is free for most enrollees.
- Part B covers outpatient doctor visits and diagnostic tests; you will pay a monthly premium.
- Part C (“Medicare Advantage”) is a private insurance option that combines the coverages of Parts A and B, along with other benefits. You should compare rates and coverage to determine if Part C is your most cost-effective option.
- Part D covers prescription drugs. You will pay a monthly premium that varies by plan.
- Medicare supplements (“Medigap” plans) are private insurance plans that help with deductibles, copays, and coinsurance. Costs and benefits vary by plan, so it is important to compare.
- What are the differences in plans, and which is the best plan for me?
- gov offers a plan finder that allows you to search for and compare different plans offered in your area.
- You should also consult with your financial and medical experts to better understand both your needs and your retirement budget for healthcare costs.
What’s Next?
After you complete your enrollment, you’ll be able to sign up for a free online Medicare account. This account provides you with several useful tools for managing your healthcare program, such as:
- Researching and comparing plans for Part C, Medigap, and others;
- Exploring coverage options;
- Tracking your prescriptions and comparing drug plans;
- Reviewing preventive services to which you’re entitled;
- Understanding and anticipating your Medicare premiums.
It’s important to stay informed about your plan and its benefits, because as your needs change, you may need to make changes in your plan. You can do this once a year, during the open enrollment period. With healthcare costs rising steadily, it just makes sense to think carefully about how you’ll cover these costs during your retirement years.
Remember, Medicare is not a “one-size-fits-all” program; it can be customized to better fit your individual needs. The more you know about it now, the more you’ll be able to make needed adjustments over time. After all, you’ve earned these benefits during your working years; why not make sure they’re working at top efficiency?
Aspen Wealth Management provides individualized guidance for clients who want to make the most of their retirement, including strategies for healthcare funding, maximizing retirement income, and other important financial considerations. To learn more, sign up for our Alexa skill, or visit our website to read our recent article, “Retiring Early: Is the Dream within Reach?”
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information has been derived from sources believed to be accurate and is intended merely for educational purposes, not as advice.
