An overview of Medicare and the Medicare enrollment process
Medicare is a federal entitlement program that provides affordable healthcare coverage for over 60 million people. Initially designed for America’s seniors, the program now covers people over the age of 65 as well as younger people with certain disabilities. Those are the basics.
This often misunderstood program can be confusing, even if you’ve been enrolled in it for years. That’s okay. You’re not alone if you’re not clear on what Medicare is or what it covers. To help you understand Medicare better, we’ve answered some commonly asked questions about the program below.
When can I enroll in Medicare?
First, let’s go over eligibility. Most people become eligible for Medicare when they’re 65. That’s the minimum age for Medicare benefits for the general population. Some younger people with disabilities can also enroll, though. This includes:
- People with end-stage renal disease (ESRD)
- People with ALS (Lou Gehrig’s disease)
- Those receiving disability benefits from Social Security or the Railroad Retirement Board
Enrollment falls into two categories: automatic and active.
Certain Medicare members will need to sign up for Medicare when they become eligible. Others will get enrolled automatically. Automatic enrollment applies to:
- People with ALS
- Those with a disability who’re under 65
- People receiving Social Security benefits at least 4 months before they’re eligible for Medicare
For these groups, enrollment is automatic, but it varies. For instance, people with ALS will get enrolled into Parts A and B once their disability benefits start. If you fall into one of these categories, check out Medicare.gov for specific information about enrollment and when your benefits start.
For everyone else, enrollment requires active participation. If you don’t get Social Security benefits and you don’t have a disability, then you’ll need to sign up for Medicare when you first become eligible. (This includes people with ESRD, who need to actively enroll as well.)
Your Initial Enrollment Period (IEP) to sign up for Medicare lasts for 7 months: 3 months before the month you turn 65, the month you turn 65, and 3 months after that month. So, for example, if you turn 65 on August 8th, your IEP runs from May 1st through November 30th.
It’s important to enroll in Medicare when you’re first eligible. The sooner you enroll, the sooner your coverage starts. Plus, if you miss your IEP and then later decide to enroll, you may pay a penalty for certain portions of Medicare. And those late enrollment penalties can last for as long as you have Medicare (i.e., forever).
What does Medicare cover?
Medicare is divided into four parts: A, B, C and D. Each of these parts covers different benefits, which we’ll highlight in this section.
Medicare Part A
Medicare Part A is hospital insurance. It covers the care you get during an inpatient hospital stay and/or skilled nursing facility. This portion of Medicare usually doesn’t have a premium because it’s paid for through work taxes.
If you accumulate 40 work credits over the course of your working life, you won’t have a Part A premium. About 99% of people get this portion without a monthly premium. You might hear it referred to as “premium-free Part A.”
Part A does include cost sharing, though, in the form of deductibles and coinsurance. So while there’s no monthly premium for most people, everyone will pay for a portion of their care.
Medicare Part B
Medicare Part B covers medical services. It’s what you probably think of when you think of typical medical benefits. This portion of Medicare covers things like routine trips to the doctor, flu shots, vaccines, X-rays, outpatient surgery and other medically necessary care and equipment.
Everyone pays a premium for Medicare Part B. Some higher-income members pay more, but everyone has a cost for this portion of Medicare. Along with the monthly premium, Part B has an annual deductible and 20% coinsurance — meaning you pay 20% of the cost of care, with no annual limit on out-of-pocket costs.
Medicare Part C (Medicare Advantage)
Medicare Part C is called Medicare Advantage. It covers all of the benefits of Medicare Parts A and B together (by law), plus added benefits that vary by plan. This portion of Medicare is sold by private companies, but it’s still regulated by the federal government.
Medicare Advantage is an increasingly popular way for Medicare members to get their benefits. About 45% of Medicare enrollees now choose private plans over Original Medicare. These plans cover a bevy of added benefits, including things that Original doesn’t, such as prescription drugs, dental and vision care, hearing aids and exams, and more.
Premiums and cost sharing vary widely with Medicare Advantage, but many plans have a $0 copay. Plus, Advantage plans cap what members pay out of pocket for medical care for the year.
Medicare Part D
Original Medicare (Parts A and B together) does not cover prescription drugs, with very few exceptions. In fact, the only exceptions are for drugs that you’d normally get in a hospital setting, like chemotherapy treatments.
If you need prescription drug coverage, you can buy a Medicare Advantage plan that covers prescriptions or a standalone Part D drug plan. Costs vary since these plans are also sold by private companies. But premiums tend to be low.
As with Part B, though, higher-income enrollees may pay more for Part D coverage. And if you sign up late (outside of initial enrollment), you may pay a penalty for not having what Medicare considers creditable drug coverage.
Can I change my Medicare coverage anytime?
The short answer is no. You can’t make changes to your Medicare coverage on a whim. There are certain times of the year, called enrollment periods, when you can make changes or switch to a different kind of coverage.
There are four major enrollment periods you should know about: General Enrollment, Open (or Annual) Enrollment, Medicare Advantage Open Enrollment, and Medigap Open Enrollment.
General Enrollment Period
The General Enrollment Period runs from January 1st through March 31st each year. During this time, you can sign up for Part A and/or Part B if you didn’t enroll when you first became eligible. If you use this enrollment period to sign up for Medicare, you may pay a late enrollment penalty because you didn’t sign up during your initial enrollment window.
If you sign up for Part A and/or Part B during the General Enrollment Period, your coverage will take effect on the first of the month after the month in which you enroll.
Medicare Open Enrollment
This is the major enrollment period for Medicare, whether you have Original Medicare (Parts A and B) or Medicare Advantage. From October 15th through December 7th each year, you can make changes to your current coverage. That means:
- Joining a Medicare Advantage plan if you have Original Medicare
- Switching to a new Medicare Advantage plan if you have an MA plan already
- Switching from an Advantage plan with drug coverage to one without it (or vice versa)
- Dropping Medicare Advantage and going back to Original Medicare
- Joining a new prescription drug plan (Part D)
- Switching your Part D drug coverage
- Dropping your Part D drug coverage altogether
This all boils down to the fact that Medicare Open Enrollment is your best (and sometimes only) chance to change your Medicare coverage.
Changes you make during this enrollment period will take effect on January 1st of the following year.
Medicare Advantage Open Enrollment
This relatively new enrollment period is available only to people currently enrolled in a Medicare Advantage plan when the enrollment window opens. Running from January 1st through March 31st each year, the Medicare Advantage Open Enrollment period allows people with Medicare Advantage plans to make a one-time change to their coverage. This is not the same as the Open Enrollment period. You can only make one change during this three-month period.
Once you make that change, your new coverage will start on the first day of the month after your new plan gets your request for coverage (according to Medicare.gov).
Medigap Open Enrollment
When you’re first eligible for Medicare, you’re also first eligible for Medicare supplement insurance. Also called Medigap, this supplement to Original Medicare covers some of your out-of-pocket costs under Parts A and B.
Once you turn 65 and enroll in Part B, you have six months from that date to enroll in any Medigap plan that’s available to you where you live.
Outside of this initial enrollment window for Medigap, you may not be able to get coverage. That’s because health insurers can use medical underwriting — taking a look at your health history and medical condition — to set rates or deny coverage altogether.
There are other enrollment periods for Medicare, including special enrollment periods if you’re still working when you turn 65 or a 5-star Medicare Advantage plan becomes available in your area. For specifics on other enrollment periods, check out Medicare.gov and navigate to your specific scenario. This is just a roundup of the most common enrollment periods.
Where can I learn more about Medicare?
The best place to start if you want to take a deep dive on anything related to Medicare is the program’s government website at Medicare.gov. This is where you’ll find detailed — and we mean very, very detailed — articles on everything from how to join a Part D drug plan to exemptions from the Part B late enrollment penalty.
Another web-based option is the Centers for Medicare and Medicaid Services, which oversees the Medicare program and offers a wide range of info about it on its website at CMS.gov.
And if you’ve got some time on your hands, consider calling your local Social Security office to set up an appointment. You can speak with someone directly about Medicare. The Social Security Administration also has a website, but its info on Medicare may not be as comprehensive as the other federal websites we’ve mentioned.
Questions about Medicare enrollment or Medicare Advantage? Call us toll-free at 1-800-485-6202 anytime to speak with a licensed health insurance agent.