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How to Prepare to Enroll in Medicare

Follow these guidelines to avoid unpleasant health care surprises when you turn 65

By Judith Graham | May 7, 2012

Every day for the next two decades, an average of 10,000 Americans will become eligible for Medicare as they turn 65 — and face a complex new set of health care decisions. If you're one of them, you might be more than a little perplexed about what you need to do about Medicare and when. Of people age 47 to 64, 56 percent say they know little or almost nothing about Medicare, according to a recent Bankers Life and Casualty survey.

“Medicare is unlike any coverage you’ve ever had,” says Adrienne Muralidharan, a senior Medicare specialist with Allsup, a Medicare advisory firm in Belleville, Ill.

Most workers have no more than two or three health insurance options to pick from, but when you sign up for Medicare, you may need to choose among dozens — with a smorgasbord of benefits and costs.

To make smart Medicare choices and avoid owing penalties, follow this advice from leading health care and insurance experts:
 
Begin to familiarize yourself with Medicare at least six months before your 65th birthday. That way, you’ll be sure to have coverage on the first day of the month you turn 65, says Joe Baker, president of the Medicare Rights Center, a nonprofit consumer organization. 
 
Don’t count on receiving a notice from the government reminding you to sign up. Only people who already receive Social Security benefits get a Medicare reminder and become enrolled automatically. Everyone else must initiate the process with the Social Security Administration (the parent agency of Medicare) by making a phone call (800-772-1213), visiting a local Social Security office or applying online on Social Security’s website.

You can enroll in Medicare as early as three months before your 65th birthday, and should definitely sign up no later than three months after you turn 65. Otherwise, you’ll have to wait until the next general enrollment period, which lasts from Jan. 1 through March 31, and your coverage won't begin until the following July. (If you’re still working when you turn 65, you get another chance to join Medicare within eight months after you retire. But it's still advisable to sign up at 65, as you'll see below.) 
 
If you enroll in Medicare after 65, you'll also likely be charged 10 percent more for your Medicare Part B premiums (more on Part B shortly) for every 12-month period you were eligible for the coverage but went without it.
 
One more reason to sign up as soon as you can: When you turn 65, there's a six-month period when Medigap insurers — which sell supplemental health insurance to pay expenses that Medicare doesn't — cannot reject you if you have a pre-existing medical condition. Once this period ends, they can.
 
You might want to schedule an appointment with a local Medicare specialist and talk through your options before your initial enrollment period begins. Contact your local Area Agency on Aging or your State Health Insurance Program for assistance.
 
Get to know Medicare’s alphabet soup. Medicare has four parts, known as Part A, Part B, Part C and Part D. You can find a full explanation of each in the Basics section of Medicare’s website, medicare.gov, but here are thumbnail descriptions: 
 
Part A covers hospital care, and Part B covers doctors’ services. These two parts are known as traditional Medicare.
 
Part A is free to people who have paid Medicare taxes on 10 or more years worth of earnings. Part B costs $99.90 or more a month, depending on an individual’s or family’s income. If you paid Medicare taxes for 7 1/2 to 10 years, you'll pay $248 a month for Part A in 2012. If you paid Medicare taxes for fewer than 7 1/2 years, you'll pay $451 a month for Part A in 2012.
 
With traditional Medicare, beneficiaries are responsible for out-of-pocket deductibles and coinsurance, also known as co-payments. In 2012, the Part A annual deductible is $1,156 and the coinsurance is $289 per day for hospital stays of 61 to 90 days; longer hospital stays cost more. For Part B, the annual co-insurance in 2012 is $140, and you pay 20 percent of the Medicare-approved amounts for services exceeding that amount.
 
Many people who have traditional Medicare buy “Medigap” insurance to help cover what Part A and Part B don't. The average Medigap premium is $177 a month. 
 
Part C is an alternative to traditional Medicare known as Medicare Advantage. Sold by private companies, Part C Medicare Advantage plans typically operate like managed care plans, with comprehensive health coverage from limited networks of medical providers, and these networks are generally more restricted than those of Medigap plans. If you join a Medicare Advantage plan, it will provide all of your Medicare Part A and Part B coverage and you won't need a Medigap policy. Medicare Advantage plans, which are usually less expensive than Medigap plans, cost on average about $32 a month. Next Avenue has a guide to Medicare Advantage plans that provides additional details.
 
Part D is Medicare’s drug benefit, also offered by private companies. Premiums for Part D plans vary, but the national average is about $31 a month.

In your early 60s, determine whether you (and your spouse, if you’re married) have worked and paid Medicare taxes long enough to be eligible for Medicare Part A. That way, you'll know whether you'll be covered at 65. You should also estimate your yearly Medicare costs — for Part B, Part C (or Medigap) and Part D — so you’ll be prepared for those expenses when the time comes. If you expect to sign up for a Medicare Advantage plan within a year or so, find out if your primary physician and specialists belong to one.
 
If you plan to keep working at 65, learn how your health coverage and Medicare will coordinate. Here are the general rules: If you work at a business with 20 or more employees, your private health insurance policy will be your primary coverage, and Medicare will be secondary, or a backup. The situation is reversed if you work for a business with fewer than 20 employees. In that case, Medicare will be the primary payer, and your private insurance will be secondary.
 
With this in mind, if you expect to be working for a small firm when you're 65, be sure to sign up for Medicare when you first become eligible, says Terri Gendel, director of benefits and advocacy for AgeOptions, an aging agency that serves suburbs near Chicago. Even if you expect to be employed at a business with more than 20 employees and Medicare will be secondary, it’s still smart to sign up for Medicare at age 65, since this means you'll avoid the 10 percent penalty for late enrollment on Part B premiums.
 
Regardless of the size of your employer, if your family members are on your health plan, check with your benefits department to see what will happen to their coverage when you hit 65 and enroll in Medicare.
 
Check on your employer’s health insurance for retirees and how that coordinates with Medicare. If you’re fortunate enough to get retiree health insurance, that coverage will be secondary to Medicare. So you should definitely sign up for Medicare Part A and Part B — and possibly Part C — even if you will receive health coverage from your employer. Otherwise, your retiree plan might not pay a dime toward your health care expenses.

Since retiree health plans vary considerably, meet with your human resources department to learn exactly how your health bills will get paid once you retire.
 
Judith Graham is a contributing writer for Next Avenue.