After having employer coverage for most of your life, the transition to Medicare can be tricky and confusing. As your parents begin to reach the age of Medicare eligibility, they might need some help navigating all the rules and information they need to learn to make an informed decision about their future healthcare.
Under Medicare, there are specific enrollment periods and potential late-enrollment penalties to watch. Beneficiaries must also understand their potential out-of-pocket costs and how their premiums work. Failing to comprehend Medicare can lead them to make the wrong choice or an irreversible mistake.
Let’s dive into all you need to know to help your parents prepare for Medicare. But to learn more about what people get wrong about their Medicare plan’s premium, visit https://boomerbenefits.com/what-people-get-wrong-about-their-medicare-plans-premium/
Medicare eligibility
You want first to determine when your parents’ Initial Enrollment Periods (IEP) begin. Most people become eligible for Medicare when they turn 65 and get a 7-month window to apply for Medicare.
Their IEP will begin three months before their 65th birthday month and end three months after. If their 65th birthday lands on the first of the month, know their IEP begins one month earlier.
If they are not auto-enrolled, they will enroll in Medicare Parts A and B through the Social Security office.
Auto-enrollment
How do you know if your parents will be automatically enrolled in Medicare?
If your parents have been receiving Social Security benefits for at least four months prior to their 65th birthday month, they will be auto-enrolled. In this case, they should get their Medicare card 2-3 months before their birthday month.
Working Past 65?
If your parents are nearing 65 but plan to continue working, their Medicare timeline will be different as they may have the option to delay their Medicare coverage.
Medicare deems active employer insurance from an employer with 20+ employees as creditable coverage for Part B. If this applies to your situation, you can delay Medicare past 65 without penalty.
You want to ensure your parents understand this part carefully. If, for example, their employer has less than 20 employees or they only have VA or retiree coverage, they want to sign up for Medicare when they turn 65 to avoid any penalties.
Once they lose the active employer insurance, they are given an 8-month Special Enrollment Period to apply for Medicare without penalty. They will submit the Part B application to Social Security and an employment form proving they had creditable coverage while delaying Medicare.
If your parents plan to delay Medicare past 65, know that many beneficiaries choose to sign up for at least Part A since it is $0 for most people and can help provide secondary hospital coverage.
HSA
Whether your parents enroll when they turn 65 or after, you want to ensure they know the rules regarding HSA contributions and Medicare. You cannot contribute to an HSA and be enrolled in any part of Medicare. Failure to comply with this rule could result in an IRS penalty.
If they are currently contributing to an HSA and plan on applying for Medicare during the three months before their 65th birthday month, they must stop contributions before the first of their 65th birthday month.
If your parents apply for Medicare after their 65th birthday month, they will want to stop HSA contributions at least six months before they apply for Medicare to avoid the IRS penalty.
Medicare payments
Contrary to popular belief, Medicare is not free. Most people qualify for $0 Part A due to their years of working and paying Medicare taxes, but Part B has a monthly premium that everyone must pay.
You want to ensure your parents know how they will pay for their Medicare. If they draw SS benefits, their Part B premiums will get automatically deducted from their check. If they aren’t, they will receive a quarterly bill.
The other critical part regarding Medicare premiums is they could pay more depending on their income. Social Security determines everyone’s Part B premiums based on their income. Most people pay the standard premium amount but could pay more if they have a higher income.
Aside from Part A and B, there is also Medicare Part D to keep in mind. Part D provides beneficiaries with prescription coverage. Like Part B, Part D gets determined by Social Security based on their income.
Medicare plan options
Once your parents better understand Medicare itself, you’ll want to help them dive into their plan options.
Medicare does not pay for 100% of your healthcare services and treatments. To help with cost-sharing, many beneficiaries opt for a Medicare Advantage or Part D plan if they do not have any retiree insurance to provide secondary coverage.
Like Medicare Part A and B, there are specific windows you don’t want to miss when applying for one of these plans. During your IEP, you can apply for either a Medicare Advantage or Part D prescription plan. If you apply for Medicare during a SEP, you will have a 2-month window to apply for either of these plans.
If you’re interested in a Medigap plan, you get a 6-month Medigap open enrollment window to apply for a plan with no health questions asked. This window is based around your Part B effective date.
Be sure to help them keep track of when is the right time to apply so they can take advantage of these critical windows.
The earlier, the better
Understanding all the different rules and parts of Medicare can take a while. You want to figure out how and when your parents should enroll in Medicare sooner rather than later. Being new to Medicare, you want to help your parents avoid missing their enrollment period and suffering a life penalty.
You may also want to consider connecting with a Medicare broker if you find your parents and yourself overwhelmed by all the facets of Medicare. Brokers can help both of you have a better understanding of Medicare itself and their plan options. The most important thing you want your parents to feel is that they are not alone as they navigate and transition to this new part of their life
Hey welcome to my blog . I am a modern women who love to share any tips on lifestyle, health, travel. Hope you join me in this journey!
Speak Your Mind