If you're gearing up to sign up for Medicare, whether in conjunction with retirement or not, it's a big deal. Once you're eligible for Medicare, you may find that your healthcare costs go down (depending on the coverage you have right now). But you may also find that you're faced with some tricky decisions you need help navigating. With that in mind, here's some important information for people who are on the cusp of signing up for Medicare coverage.
1. It's important to choose your initial Part D plan wisely
Original Medicare includes Parts A and B, which cover hospital and outpatient care, respectively. But if you plan to stick with original Medicare, you'll need to choose a Part D plan to get coverage for prescription drugs. And that's an important decision, as it could spell the difference between spending more on medication versus less.
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One thing you should know is that all Part D plans use formularies to group medications into different tiers that determine their cost. So as a starting point, if you're planning to enroll in Medicare soon, make a list of your prescription medications. But also, talk to your doctor about potentially switching to generics or lower-cost alternatives if they exist, as that could lead to lower Part D costs.
2. An Advantage plan might save you money, but make sure you're not paying for benefits you can't use
You don't have to stick with original Medicare once you're eligible for coverage. Instead of having to choose a Part D plan, you could sign up for an all-in-one Medicare Advantage plan.
Some people like Medicare Advantage better than original Medicare because these plans tend to offer supplemental benefits on top of what original Medicare offers. For example, an Advantage plan might cover a gym membership, meal services, and more.
But before you commit to paying for an Advantage plan, do your research and make sure you'll actually get to take advantage of the benefits you're paying for. Your plan may not cover a gym membership unless your doctor certifies to the fact that you have a specific condition that regular exercise should help improve. And you may not qualify for meal services unless you're diagnosed with something like diabetes that requires major dietary modifications on your part.
3. Make sure to stop HSA contributions if you're signing up after age 65
Medicare eligibility begins at age 65. But you don't have to sign up at that point if you don't need coverage. It may be that you're a bit older than 65 and didn't sign up then because you were still working and had a group health plan through your job.
But if you're enrolling in Medicare after age 65 and you're currently contributing to a health savings account (HSA), you may want to stop doing so as soon as possible. Once you're signed up for Medicare, you're barred from funding an HSA.
However, one quirk about Medicare is that if you sign up six months after turning 65 or later, you're automatically entitled to six months of retroactive coverage. So in that scenario, it's important to halt HSA contributions to cover that six-month period.
To be clear, you don't have to stop funding an HSA at age 64 1/2 if you intend to enroll in Medicare at 65. It's only if you're signing up for Medicare six months after your 65th birthday or later that this rule applies.
You may be excited to start getting health coverage under Medicare. Use these tips to make the process of enrolling as smooth as possible.
