It’s that time of year again—Medicare’s Open Enrollment Period began on October 15 and ends on December 7. If you’re a Medicare subscriber, you can:
- Move from basic Medicare to a Medicare Advantage plan
- Move from a Medicare Advantage plan to basic Medicare
- Change Medicare Advantage providers
- Change your Medicare Part D prescription drug coverage
But what if you’re turning 65 sometime within the next few months? If you’ve retired or no longer participate in a healthcare plan at work, you may have some important decisions to make soon.
Even if you’re enrolled in Medicare, you still may not know as much about it as you think. So here's a quick refresher.
A quick overview of Medicare options
Medicare has many moving parts:
- Basic Medicare Part A covers some, but not all, in-patient healthcare costs. Generally, there’s no premium if you’ve worked at least 10 years or more.
- Basic Medicare Part B covers some, but not all, outpatient healthcare expenses and some inpatient care and prescription drug costs. Monthly premiums start at $164.90 (for 2023).
- Basic Medicare Part D prescription drug plans cover some, but not necessarily all, costs for prescription drugs. These plans are provided by private insurance companies.
- Basic Medicare Part G (Medigap) are optional plans offered by private insurance companies to pay for costs not covered by Medicare Parts A and B.
- Medicare Part C (Medicare Advantage) are plans offered by private insurance companies that bundle Medicare healthcare and prescription drug coverage services. Premiums, out-of-pocket costs and coverage networks vary by plan.
Medicare’s enrollment rules are often confusing. If you miss key headlines, you may be penalized financially for the rest of your life.
The Medicare enrollment true or false quiz
How well do you understand Medicare’s key enrollment and coverage provisions? Take this seven-question true-or-false quiz to find out.
1. True or False: You’re automatically signed up for Medicare when you turn 65.
Answer: False.
You are responsible for signing up for Medicare yourself. Fortunately, you’ll get plenty of advance warning. You’ll be able to sign up for Basic Medicare Parts A, B and D and supplemental Medigap insurance as early as three months before the month you turn 65, and you’ll have three months after that month to enroll. If you enroll after the initial enrollment period you may end up paying costly late-enrollment penalties, which could last the rest of your life.
2. True or False: You can delay enrolling in Medicare if you’re still covered by your employer’s health insurance plan.
Answer: True.
Even after you’re eligible for Medicare, you can choose to delay enrolling if you’d prefer to stick with your current healthcare plan.
However, there may be situations where it’s more cost-effective for you to drop your employer’s coverage and switch to Medicare. For example, if you’re in a high-deductible health plan, you may find that switching to Medicare could reduce your monthly premiums and out-of-pocket co-pays and deductibles. However, if you have a Health Savings Account, you can no longer contribute to it once you sign up for Medicare.
3. True or False: Once enrolled in Medicare you can never drop your coverage.
Answer: False.
You can always drop your Medicare coverage. A typical reason to do so is if you enrolled after being out of work for a long time and then found a new job with a healthcare plan. Dropping Medicare will save you from having to pay both Medicare and employer healthcare premiums.
However, before you drop your Medicare coverage, it’s important to know whether you’re truly covered by your employer.
Generally, if your new employer has more than 20 employees, you can sign up for your company’s healthcare plan (if you’re eligible) and drop your Medicare coverage.
But if your new company has fewer than 20 employees, Medicare remains your primary coverage and your employer’s plan may only pay for certain costs that Medicare doesn’t cover.
If you’re uncertain as to whether you should or shouldn’t cancel your Medicare coverage, speak with your new employer’s benefits department.
4. True or False: Being on COBRA counts as being covered by your employer’s healthcare plan in terms of Medicare enrollment deadlines.
Answer: False.
If you are age 65 or older and are laid off from your job, you have eight months from the day of termination to enroll in Medicare Part B if you don’t find another job that offers employer healthcare coverage.
Being on COBRA doesn’t count as being covered by employer-provided healthcare. Many people make the mistake of staying on COBRA for a year or more without signing up for Medicare. They then discover that they’ve missed their 8-month special enrollment period and end up having to pay late-enrollment penalties for the rest of their lives.
5. True or False: You can change Medicare options if you unhappy with your current coverage.
Answer: True.
Twice a year, Medicare offers additional enrollment periods that allow subscribers to change plans.
- During Medicare’s General Enrollment Period (January 1-March 31) subscribers can: Switch from one Medicare Advantage plan to another or switch from a Medicare Advantage plan to Basic Medicare (Parts A, B and D). Changes take effect the first day of the month after you make the change.
- During Medicare’s Open Enrollment Period (October 15-December 7) subscribers can: Switch from Basic Medicare to a Medicare Advantage plan; switch from a Medicare Advantage plan to Basic Medicare; switch Medicare Advantage providers; or change Medicare Part D providers. Changes take effect on January 1.
6. True or False: Medicare gives you access to more physicians and hospitals than your current employer’s healthcare plan.
Answer: Possibly True, possibly False.
When you're enrolled in Basic Medicare, you can see any physician at any hospital or healthcare facility that accepts Medicare payments. These may include physicians who are not members of your employer's healthcare plan network.
But here’s the catch: Physicians and facilities don’t have to accept Medicare payments. Over the past few years, particularly in the post-COVID era, more than 11,000 non-pediatric physicians have formally opted out of Medicare. The good news is that this number only represents 1.1% of all physicians.
However, if you are considering dropping your employer’s coverage to enroll in Medicare, make sure you check with your existing physicians and healthcare institutions to see if they do accept Medicare payments.
Also, before signing up for a Medicare Advantage plan, check to see if your physicians are members of the insurer's network.
7. True or False: Free assistance is available to help you sort through your Medicare coverage decisions.
Answer: True.
Every state offers its own State Health Insurance Assistance Program, which offers personalized consulting to help you understand and evaluate your various Medicare options. You can find one in your state by vising https://www.shiphelp.org/
This material has been provided for general informational purposes only and does not constitute Medicare advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a Medicare consultant before making and major Medicare-related decisions.
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This article was co-authored by Joelle Spear and Jeffrey Briskin. Joelle is a financial advisor and Partner located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. She offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. She can be reached at 508.598.1082 or jspear@canbyfinancial.com. Jeffrey Briskin is Director of Marketing at Canby Financial Advisors.
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