Healthcare is an essential need for everyone, and it becomes even more important as you age and require more medical services. The Medicare program is a vital component of getting American seniors the healthcare they need, but it comes with some rules that many people find confusing or difficult to follow. Below, we've called out five key Medicare rules that should be foremost on your mind as you prepare for your golden years.
1. When to apply for Medicare
Most people become eligible to receive Medicare when they reach age 65. As long as you or your spouse worked long enough to get Medicare coverage -- typically 10 years -- then it makes sense to apply for free hospital coverage under Medicare Part A at your earliest opportunity. You can file an application for Medicare as early as three months before you turn 65. Moreover, if you've applied for Social Security benefits earlier than that, then your Medicare Part A coverage will typically begin automatically on your 65th birthday.
Deciding between original Medicare and Medicare Advantage plans is a key thing to consider. Image: Medicare.gov.
Medicare Part B medical care coverage requires paying a monthly premium, so if you have other sources of coverage, you might not want to enroll automatically in the program. For instance, those who have group health coverage under an employer plan can wait beyond age 65 to sign up for Medicare Part B, and then sign up later when their other coverage ends. Again, though, applying three months prior to turning 65 is the best time to get Part B, and you can get automatic coverage if you so choose if you apply for early Social Security benefits.
2. Penalties for applying late for Medicare
The reason it's important to apply for Medicare at the right time is that you can owe penalties if you get coverage late. Those who qualify for premium-free Part A coverage won't face late penalties, but for Part B coverage, every 12 months that you go without enrolling when you should have will send your monthly premiums up by 10% for the rest of your life. Part D prescription drug coverage penalties for applying late can also apply if you chose not to get a policy when you were first able to do so.
As discussed above, some people have other sources of coverage through work or a spouse's health plan. Such people get a special enrollment period starting the month after the qualifying coverage ends and extending for eight months. As long as you sign up for Medicare during that period, you typically won't owe a penalty.
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3. What Medicare Advantage plans offer that original Medicare doesn't
Medicare Advantage plans, also known as Medicare Part C, have features that traditional Medicare doesn't. Most Medicare Advantage plans are designed to have more complete coverage than traditional Medicare, offering out-of-pocket maximums and different copayment and coinsurance options that can change the amount you have to pay for medical services. By using managed care options, Medicare Advantage plans can cut costs and pass on savings to policyholders through better benefits or lower premiums. However, these plans can also have restrictions on which medical professionals you can use to take advantage of the best coverage options available. It pays to look closely at all your options to pick the one that best fits your needs.
4. When you can change your coverage
Annual enrollment periods allow you to switch between different Medicare offerings. From October 15 to December 7, you can change between original Medicare and a Medicare Advantage Plan, or you can switch between Medicare Advantage plans. You can also make changes to your prescription drug coverage during that period, whether it involves getting an integrated Medicare Advantage plan that offers such coverage or getting a separate policy under Medicare Part D.
A second period specifically allows you to go from a Medicare Advantage plan back to original Medicare, but no other changes are allowed. This period extends from January 1 to February 14.
5. How to deal with disputes over coverage
You're allowed to appeal a decision that Medicare or a Medicare Advantage or Prescription Drug plan provider makes concerning your coverage. If you're denied coverage, then you'll typically go through a five-step process. First, you can seek a redetermination by the company handling claims for Medicare. If that doesn't work, then a qualified independent contractor will reconsider the decision. Your next recourse is a hearing before an administrative law judge, and if that fails, then a Medicare Appeals Council can review the case. Finally, you have the right to take the case to federal court for a judicial review.
Medicare is an essential part of your financial planning, and understanding these rules will go a long way to making sure you have the coverage you deserve. Keep these rules in mind, and you'll be able to make better decisions about Medicare when the time comes.
