Medicare is a complicated offering and when to apply for Medicare is critical for every senior turning 65.
The rules are simple yet very complicated. When you are about to turn 65 you need to consider if you want Medicare or more importantly if you need to apply for Medicare or wait. Let’s explain it this way. The rules simply state if you are turning 65 and have individual health insurance you must go onto Medicare. If you work for a company with less than 20 employees, you must go onto Medicare and apply for Parts A & B. If your company has more than 20 employees, you don’t have to get full Medicare, but it makes sense to take Part A which is hospitalization and has no monthly premium. You can delay Part B until you retire if your employer has 20 employees or more. Part B costs $170.10 per month for 2022. It does go up annually.
You have a 7-month window to apply with the first of the month you turn 65 being the effective date. The three months before, the month of, and 3 months after your 65 birthday is the window to sign up for Medicare or be subject to lifetime fines. Of course, the exception is if your birthday is the first of the month then Medicare starts the month before.
So, based on when you decide to get Medicare determines the effective date without a lifetime fine. Applying during the three months before your 65 birthday simply means your effective date for Medicare is the first of the month of your 65th birthday.
So many seniors make a mistake and either does not understand how Medicare works or choose to ignore it and stay on their group coverage. The 20-employee rule dictates whether there are lifetime fines for not taking cover when you are supposed to do so. The fine is lifetime and 10% of the then Part B premium and cannot be abated because you made a mistake and didn’t understand the rules.
Medicare is complicated and in Clark County Nevada there are 82 different options available.
There is, of course, standalone Medicare meaning you take Parts A & B and get a drug plan. Good options except Medicare is the only insurance without an annual maximum meaning you pay 20% of the bill regardless of how high it may be. Go into the hospital for a heart attack or cancer and that bill can exceed $200,000. You pay 20% of that bill. There is also a way to end up paying 35% of the bill. Medicare has something called assignment of benefits. It simply means when you sign that, the provider can only bill you 20% of the bill and not the 15% Medicare disallowed. Many providers do not take an assignment of benefits because they want to bill you the 15% Medicare disallows. Many large providers like the Mayo Clinic in Scottdale AZ do not take an assignment of benefits so they can bill the 15% Medicare disallows.
The next option is to have Parts A & B and get a Medicare Supplement and standalone drug coverage. The Medicare Supplement is available from many the insurance companies and while the plans are standardized by the government the premiums are set by the insurance company and do vary all over the place. These Medicare Supplements are designated by a letter code like plan G or A or B etc. These plans offer standard benefits, so all plan G’s have the same benefits, but the premiums are all different based on which insurance company you choose. Choosing the right insurance company for you is difficult. Rates vary so my suggestion is to use an experienced Medicare broker who understands the local market and can explain the differences between companies and the pricing. You also have to buy a standalone drug plan because these supplements do not offer it and the law requires you to have a plan even if you take no medications. Guess what, there is a lifetime fine for not having a drug plan and there are specific times when you can buy one so do it when you buy your supplement to avoid the fines. There is a new rule in Nevada called the birthday rule allowing you to change your supplement plans with guaranteed issue the month of and the month after your birthday. Change any other time and you have to go through underwriting meaning you could be denied coverage based on your medical issues.
Lastly, there are Medicare Advantage plans that include drug coverage and most of these plans do not have a monthly premium because between the government and the insurance company these premiums have been eliminated. These MAPD plans come in both HMO and PPO type plans. Deciding which type of plan is your choice as the consumer. Your broker can advise you and explain the differences, but the choice is yours to make. The Medicare broker should be familiar with the local market to advise you of the best plan for you. Medicare allows you to change plans annually between October 15th and December 7th and again between January 1st and March 31st. After those dates, you are locked into your plan for the remainder of the year.
As you now know, there are many options available, and you should choose wisely based on your medical needs and ability to pay the premiums. Using an experienced Medicare broker is in your best interest as they know the local marketplace and they cannot charge you for their services. Ask them for advice to get the best plan for your needs.
That’s the local Medicare market. By the way, if you leave the state or county, you first notify social security of that move.
If have a Medicare supplement all you must do if notify the insurance company and they will give you the rate for that area. You must change your drug plan and the best way to do that is to notify social security that you have moved out of state or county, and they allow you 63 days to change your drug plan. If you have an MAPD plan you must change that plan with one in your new location. It all starts when you notify social security that you moved. Then go shopping or call a Medicare broker for advice.
The Barend Agency Inc.
Len Barend, broker