Navigating the Medicare Enrollment Maze

Those born in 1950 will turn age 65 next year. Let confusion rein as “seasoned boomers” navigate various enrollment periods for Medicare and a plethora of choices.

People sometimes confuse rules for receiving full Social Security benefits, called “full retirement age” (FRA), with Medicare sign up periods. For those born between 1943 and 1954 FRA is age 66. For those born in 1950 your FRA is age 66, but at age 65 you encounter the Medicare Initial Enrollment Period (IEP), your first opportunity to enroll in Medicare parts A and B. Heads up babes of 1950! Except for those medically disabled prior to age 65, the IEP begins 3 months before your 65th birthday and ends 3 months after your 65th birthday. Those born early in 1950 need to start planning shortly. Failure to enroll on time or follow rules may result in lifelong financial penalties.

Don’t confuse the IEP with the Open Enrollment Period (OEP) which encompasses October 15 to December 7 each year. Upon us for 2014, you may enroll in a Medicare Advantage plan for the first time or change your existing plan, or change your Medicare Part D prescription drug plan. You, if age 65 or over, or you if your aging parents have designated you as the “go to” child to help them with the challenges of aging, have noticed a bombardment of ads touting healthcare plans. Always review your current plan as contracts and/or drug formularies change every year. Plans with comparable features can have different costs. Just because a plan is blessed by a senior citizens organization, does not mean it is best for you. It pays to shop. Financial planners who offer comprehensive consulting services maintain relationships with local and national resources such as www.GoodCare.com, designed to help seniors and their caregiving children navigate the healthcare maze.

There is the Special Enrollment Period (SEP) which allows one who was covered under a group health plan offered by an employer or union to sign up for Medicare Parts A and B anytime, if they were not required to sign up during the IEP. But there is a flag on that play! The group health plan must cover 20 or more employees. So if you are covered under a small business plan with less than 20 members, you would sign up for Medicare Part A during the IEP. There is no premium charged for Part A which covers hospitalization benefits, however, Part A coverage would be secondary to your primary coverage under the employer plan. When you finally retire, you could sign up for Part B or other plans, providing proof of employer coverage up to that point.

There are Special Enrollment Periods for a person who moves from one service area to a new location and who needs to change plans. You move mom from Kansas to be closer to your home; her plan will need to change. Moving in or out of a nursing home may necessitate a change in coverage.

Those that did not enroll during the IEP, may do so during the General Enrollment Period (GEP) between January 1 and March 31 for coverage effective on July 1 of the same year. Here is where those who failed to sign up as required will be hit with financial penalties. Then there is the Medicare Advantage Disenrollment Period (MADP) from January 1 to February 14 each year that allows one to opt out of a Medicare Advantage Plan. A person could then enroll in a Part D Prescription Drug Plan during the MADP, and possibly a Medigap plan as well.

The open enrollment period for a Medigap plan begins the month one turns 65 and runs for 6 months. During this time one can buy a Medigap plan available in their state without medical underwriting.

Note that Medicare coverage is not simple, nor is it free. A couple with some ordinary health challenges such as high blood pressure or diabetes can easily spend $13,000 a year in premiums, co-pays, deductibles, and the “donut hole” in prescription drug eligibility. There is a host of items not covered by Medicare, including long term care. Healthcare planning is a key component of retirement security. Good advice is one of your better investments!

Lewis Walker is President of Walker Capital Management, LLC. Certain advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative of SFA which is otherwise unaffiliated with Walker Capital Management, LLC. lewisw@theinvestmentcoach.com

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