Enrolling in Medicare can be an intimidating experience. Throughout our lives, our employers often present us with one or two health insurance options, so we aren’t used to making big decisions about health insurance on our own.
A further complication is that you are expected to educate yourself on Medicare rules for eligibility and enrollment. Medicare will mail you a 100+ page handbook for you to try to decipher, and then there are endless flyers and pamphlets from insurance companies that will flood your mailbox in the year prior to turning 65.
Sometimes this results in procrastination or total paralysis in decision making. The end result is that people either didn’t know or didn’t act to enroll in Medicare during their initial enrollment window, and now they will likely owe a penalty. They also have to wait for the General Enrollment Period (GEP) to roll around so that they can enroll late.
Let’s review the most common enrollment periods and how they function.
Your Initial Enrollment Period for Medicare (IEP)
Medicare gives you a seven-month window for your initial enrollment into Parts A, B and D. It begins three months before the month of your 65th birthday. It ends three months beyond that same month. Most individual enroll in Medicare during this window, but some people who are still working can delay Parts A and/or B and D.
Part A is your hospital coverage, providing benefits for hospitalization, skilled nursing facilities, blood transfusions, some home health care and hospice. Part B is your medical or outpatient coverage, providing benefits for preventive care, doctor office visits, lab work, durable medical equipment, ambulance, surgery, chemotherapy and much more.
If you have creditable group health coverage from your employer or your spouse’s employer, you can miss the IEP without fear of a penalty. That employer coverage is primary to Medicare as long as there are 20 or more employees working there. Medicare is secondary.
Some people will delay all parts of Medicare, especially if they plan to contribute into a health savings account. However, most people enroll in at least Part A, since Part S doesn’t cost anything as long as you or your spouse have had at least 40 quarters of work history in the United States.
Though Part A will be secondary, it could reduce your hospital spending if you have an inpatient stay. Part B, however, has a monthly premium so many individuals delay that until they retire. Their group coverage already provides outpatient benefits, so many people don’t want to pay for Part B outpatient coverage at the same time.
Later when these individuals retire, and their group coverage ends, they will be given a Special Enrollment Period to enroll in Parts A, B and D without penalty.
However, there is no Special Enrollment Period for people who missed their IEP and have been without creditable coverage. So, if you failed to enroll because you were either uninformed or you just didn’t feel you needed the coverage, then later when you do want or need coverage, you’ll have to wait for the General Enrollment Period.
General Enrollment Period
Medicare’s annual General Enrollment Period begins on January 1st and goes through March 31st each year. People who missed their IEP or SEP can use the GEP to join Medicare Parts A and B.
Your benefits will begin the following July 1st. Once you are enrolled and have your new Medicare card in hand, you can work on applying for a comprehensive Medigap plan or a Medicare Advantage plan to begin on July 1st as well.
It’s important to note that not everyone needs the GEP. As we mentioned, people who are still working at age 65 can use a Special Election Period to enroll in benefits that begin immediately after retirement.
The General Enrollment Period is more commonly used by people who for whatever reason missed their IEP and did not qualify for a Special Election Period or missed their IEP and also missed their SEP.
Missing earlier windows and enrolling during the GEP often results in late penalties for Parts A and/or B.
Most beneficiaries aging into Medicare qualify for zero-premium Medicare Part A. This is because people who have worked at least 10 years in the United States have paid Medicare taxes toward their future Part A benefits. If you yourself haven’t worked, but your spouse has, you can qualify for zero-premium Part A on their work history.
If you don’t qualify for premium-free Part A, you can purchase Part A. However, in this scenario, missing your IEP could make you incur a 10% penalty for delayed enrollment. The penalty is charged for twice the number of years that you could have been enrolled but were not. So, for example, if you enrolled one year late, you would pay the penalty for two years, and so on.
The Part B late enrollment penalty is calculated differently. You will pay a cumulative 10% penalty for every twelve-month period that you were eligible for Part B but did not enroll in it. So, waiting 5 years would result in a 60% penalty that you would pay for as long as you are enrolled in Medicare Part B. For most people, this means forever.
Part B penalties are more common since so many people qualify for premium-free Part A.
Where to Enroll During the GEP
You can enroll during the General Enrollment Period in person at the Social Security office, or you can call them by phone at 1-800-772-1213. You can also visit their website at www.ssa.gov/medicare to enroll.
Be aware that applying by phone takes longer since an application must be mailed to you. If you are short on time, opt for enrolling in person or online.
To learn more about the various enrollment periods, you can visit this post.