It’s no secret that Medicare can be…confusing. Whether you’re enrolling for the first time or considering changes to your health insurance plan, you may be wondering whether to enroll in Original Medicare or a Medicare Advantage Plan, what type of coverage you’re eligible for, whether to sign up for prescription drug coverage, what changes you can make to your current coverage and more.
Start reading to learn more about coverage options and how to make the best choices for yourself or your loved one.
Medicare open enrollment period
When you can enroll in a Medicare plan or make changes to your current plan depends on your circumstances.
If you’ve never had Medicare before, the open enrollment period begins three months before you turn 65 and continues for seven months—also known as the initial enrollment period. So, if you turn 65 in November, for example, you can sign up from August through March. However, if you don’t sign up within this window and want to sign up later, you’ll be charged a penalty, so plan ahead.
These rules determine when you’re actually covered under Medicare:
- If you enroll before you turn 65, coverage begins the month you turn 65.
- If you enroll in the fourth month of your initial enrollment period, coverage begins the following month.
- If you enroll during the fifth month of the enrollment period, coverage begins the second month after you enroll.
- If you enroll during the sixth month of the enrollment period, coverage begins the third month after you enroll.
For those already enrolled, open enrollment for next year, also known as the annual election period, is Oct. 15 through Dec. 7. This is when you can make changes to your plan or enroll in a different plan. These changes take place Jan. 1 of the following year. The changes you can make during the annual election period include:
- Switching from Original Medicare to Medicare Advantage
- Switching from Medicare Advantage to Original Medicare
- Switching from one Medicare Advantage plan to another
- Switching from one Medicare Part D plan to another
- Enrolling in Medicare Part D
There are a couple other circumstances that follow different enrollment periods: Special enrollment periods are available for those who have certain life changes like losing insurance coverage, moving, qualifying for financial assistance, and more. See the rules for these circumstances on Medicare.gov.
The Medicare general enrollment period runs Jan. 1 through March 15. This is for those who didn’t sign up for Medicare Part A or Medicare Part B when first eligible and who don’t have access to a special enrollment period. Coverage for those signing up during this period begins July 1.
Who is eligible for Medicare?
Medicare enrollment is not mandatory. Many people who are still working and meet the conditions for Medicare coverage opt not to enroll or to delay enrollment. The following categories of people are eligible for Medicare:
- U.S. residents age 65 and older, who are either U.S. citizens or lawful aliens residing in the United States for five or more continuous years before applying for Medicare
- People who qualify to receive U.S. Social Security retirement benefits, Railroad Retirement Benefits or Social Security Disability Insurance
- People with end-stage renal disease or Lou Gehrig’s disease who meet certain requirements
- People who have received U.S. Social Security Disability benefits for 24 months
If you still have questions about Medicare eligibility, enter your information into the Medicare.gov eligibility and monthly premium calculator.
Types of Medicare plans and coverage
The two major types of Medicare plans are Original Medicare and Medicare Advantage. With Original Medicare, the government pays directly for the health care services you receive. Here are some facts to know about Original Medicare plans:
- They include Medicare Part A (which is hospital insurance for inpatient care, skilled nursing care, and some home health and hospice care) and Medicare Part B (which pays for doctor and provider services, outpatient care, home health care, durable medical equipment and some preventive services).
- They allow you to see a specialist without prior authorization.
- They require you to pay certain premiums, deductibles and coinsurances.
- They enable you to enroll in supplemental Medigap insurance to help reduce out-of-pocket costs.
- They do not include prescription drug coverage, or Medicare Part D, which is available only through private insurance companies.
- People who have worked and paid Medicare taxes long enough are eligible for free Medicare Part A coverage, while Part B coverage requires premiums.
Medicare Advantage plans, also known as Medicare Part C, are administered by private insurance companies who contract with the federal government. The most common types of Medicare Advantage plans include health maintenance organizations (HMOs), preferred provider organizations (PPOs) and private fee-for-service plans. These plans vary, but here are some general facts about them:
- They bundle Part A and Part B benefits and combine them with additional coverage for services like dental, vision and hearing care.
- They usually include prescription drug coverage.
- They typically include a specific network of doctors you must choose from.
- They may require a referral to see a specialist.
- They may require you to get approval before certain drug costs or services are covered.
- They usually have lower out-of-pocket costs than Original Medicare plans do.
There are two more supplemental insurance plans offered by private companies. The Medicare prescription drug plan, or Medicare Part D, is a supplemental plan that covers prescription drugs. This Medicare supplement insurance is optional for purchase with Original Medicare or with Medicare Advantage plans that don’t already cover prescription drugs.
Medigap is a type of insurance that supplements Original Medicare but can’t be purchased with Medicare Advantage. Sold by private insurance companies (and entirely optional), Medigap plans cover costs remaining after Original Medicare plans pay their portion—including outstanding deductibles, coinsurance and copays. Medigap plans may also pay for health care costs not covered by Original Medicare, like care received when traveling abroad.
Medigap premiums vary by insurance company, but each plan offers a standardized set of benefits. Depending on where you live, you can choose from up to 10 different Medigap policies offered in your state. Most states offer standard plans A, B, C, D, F, G, K, L, M and N, but Minnesota, Massachusetts and Wisconsin, for example, standardize plans differently. So, do your research before you purchase Medigap insurance.
Questions to ask when signing up for Medicare
Now that you know your Medicare options, here are some important questions you should ask before you enroll in a Medicare plan or plans:
- What are your health care costs now? See if you can quantify your annual out-of-pocket costs, including premiums, copays, coinsurance and deductibles. This will help you make an educated decision about any changes you might make or about which options to choose. Compare your costs to the plans you’re considering, estimating costs for any services you plan to receive.
- Do your doctors accept Medicare, and which providers are in-network for the plan you may choose? This can make a big difference in the plan you choose because you likely want to keep your trusted providers. This is especially applicable if you’re considering a Medicare Advantage plan.
- Do you have retiree insurance that covers certain health care costs? For example, many retirees have prescription drug coverage. In that case you wouldn’t need Medicare Part D and might choose Original Medicare over Medicare Advantage.
- Do you want or need coverage for anything specific? Consider your health and how you use your health insurance. If you use a lot of dental or vision services, for example, a Medicare Advantage plan might be the best option.
- What trade-offs are you willing to accept? A Medicare Advantage plan may have higher premiums but lower out-of-pocket costs, while an Original Medicare plan typically offers a wider network of physicians and allows you to visit specialists without a referral.
- Are you eligible for programs that help lower your costs? If you qualify, take advantage of state and federal programs like Medicaid that help pay for Medicare costs.