Throughout Robert Joseph’s career, the Alvin, Texas, electrician always understood his health insurance policies. “I’ve never had a problem,” Joseph says, “until I tried to sign up for Medicare.”
The chief reason: Joseph didn’t sign up when he turned 65. He was still working, receiving health insurance from his employer. And when his company went bankrupt at the end of 2009 – Joseph was then 67 – he received 18 months of severance pay.
“On my last day of work, I went to the Social Security office, asking for some guidance,” recalls Joseph. He never spoke to an expert; instead, he says, he was handed a couple of forms to complete. He researched his Medicare handbook, which noted that “current” employees didn’t need to apply for Medicare. Since he continued to get monthly severance checks that deducted Medicare taxes and he was allowed to continue buying health insurance through the same carrier for the 18 months, he thought he could wait to join Medicare. He was wrong.
Medicare no longer considered him a “current” employee and said he should have enrolled within eight months of his layoff, not 18 months later. As a result, for the rest of his life, Joseph may have to pay extra on his monthly Medicare premium (10 percent for each year he delayed enrollment after his job ended). Even worse, Joseph will be without any insurance for a year. Under Medicare rules, he has to wait until the next open enrollment period, beginning in January, to sign up, and coverage won't begin until July.
Joseph is not alone. “We’re seeing various people who delayed enrollment into Medicare for various reasons,” says Frederic Riccardi, director of programs and outreach at the Medicare Rights Center, a nonprofit group that helps people with Medicare disputes.
Part of the problem is due to the absence of what most Americans used to see as a simple dividing line: On or about their 65th birthdays, they were expected to stop working, become eligible for full Social Security benefits and sign up for Medicare. Now that a growing number of people work past 65, and the age threshold for collecting full Social Security benefits is 66 and climbing, the transition period is less clear.
To avoid mistakes, here are five tips to help you navigate Medicare.
1. You must sign up for Medicare when you turn 65.
The only exceptions are for people already receiving Social Security benefits – in which case you’ll be automatically enrolled – or are employed (or whose spouse is) and getting health insurance through work.
“We will not be knocking on people’s doors to come in to file,” says Steve Richardson, deputy regional communications director for the Social Security’s office in Boston.
You can start signing up – online, via a toll-free telephone number or in person at a local Social Security office (make an appointment first) -- three months before your 65th birthday. You have an additional three months after your birthday month to apply before penalties kick in.
If you hold off because you (or your spouse) are employed and covered by a company plan, you have eight months to enroll after the employment ceases.
And remember, Medicare isn’t family coverage, like you might have had from work. You may be eligible, but that doesn’t cover your spouse or dependent children. They will need to buy insurance from a private company.
2. Medicare is not free.
With all the talk about the high federal budget costs of Medicare, some may erroneously think the government pays for all Medicare services. Far from it. Beneficiaries have to pay monthly premiums, deductibles and co-payments or coinsurance. Figuring out your coverage and costs can be challenging, especially given Medicare’s different alphabetic parts: A (for inpatient hospital care), B (for outpatient services and doctor visits) and D (an optional drug benefit). There's also a Part C, usually known as Medicare Advantage. This is an alternative to traditional Medicare and is offered by private insurance companies.
“Make sure to choose wisely,” advises Riccardi. For example, if you opt for a Medicare Advantage plan, you may get benefits not offered in traditional Medicare – such as eyeglasses – but the plans may restrict doctors or hospitals and require advance permission for certain services. Some Medicare Advantage plans may also limit coverage geographically, so you may be forced to pay out-of-network fees if you visit grandchildren in another state or if you spend the winter in Florida.
Private insurers also offer Medigap policies that supplement parts A, B and D and help cover deductibles, coinsurance costs and services that may be exempt from Medicare coverage. Military retirees can choose supplemental plans from Tricare.
3. Medicare does not cover everything, but it may cover a lot more than you think.
“A good rule of thumb is ‘Medicare doesn't cover most things above the neck,’” says Helen Mulligan, a health insurance specialist in Medicare’s Boston office. For example, Medicare doesn't cover hearing aids, dentures (or most dental procedures) or eyeglasses, although it does cover cataract surgery.
Basic Medicare also doesn’t cover extended stays in nursing homes or treatment overseas, although some of the more expensive Medigap plans do cover overseas travel.
But the 2010 health-care overhaul law made a number of preventive care services free for beneficiaries, including annual mammograms, flu shots and periodic colonoscopies, as well as screening tests for cervical cancer, prostate cancer and high cholesterol. Also covered is an annual wellness visit.
4. If Medicare rejects a claim, appeal.
According to some estimates, one in seven claims filed with Medicare are rejected. The reason can be as simple as insufficient or inaccurate information filed by a doctor; often, it’s just an erroneous procedure code that can be quickly corrected.
“It doesn’t hurt to appeal, and it doesn’t cost anything,” says Mulligan. “You don’t need to hire a professional.” Instructions and forms are easy to find and use on the Medicare.gov web site. (Scroll down to the “Need help?” box and click on “Appeal a claim.”)
But, Riccardi adds, you should not hesitate to enlist the help of your doctor or medical facility, especially if they need to write a letter to explain the medical necessity of a treatment or particular drug.
5. Medicare is not just for seniors.
If you have been getting disability benefits from Social Security for 24 months, you can receive Medicare at any age. Medicare also has no age requirements for people with Lou Gehrig’s disease or kidney failure.
