“Welcome to America’s hottest talk line. Ladies, to talk to interesting and exciting guys free, press 1 now. Guys, hot ladies are waiting to talk to you . . . .”
Wait! I thought I was calling Social Security to ask a question about enrolling in Medicare.
It’s the first hour of my mission to sign up for Medicare and already I’m making mistakes. In this case, it’s minor (and amusing), misdialing the toll-free number by one digit. But it serves as a warning: There are many missteps I can make, some of them serious, if I’m not careful.
Even for me, a consumer reporter who has written about health-insurance issues, enrolling in Medicare is a daunting task. The terminology is confusing and the options are seemingly infinite, based on the amount of promotional material that’s begun arriving in my mailbox. The letters from various insurance carriers began appearing exactly six months before my 65th birthday and after three months they weighed 1.5 pounds. More packets arrive daily. Medicare experts tell me I can thank the data brokers for the onslaught: Names and birth dates are for sale to anyone.
Enrolling is a task I’d like to put off, but I can’t. I no longer have job-based insurance, and my current health insurer has notified me that my policy will soon expire, on the first of the month in which I turn 65.
I know that the decisions I make may differ from those made by friends, relatives and even my husband. Yet we share many of the same frustrations in the sign-up process. For anyone in a similar situation, here are some of the lessons I’ve learned since I embarked on my Medicare sign-up mission.
Just do it!
Yes, Medicare is complicated, but turning 65 is the time to deal with this. The government will not automatically enroll you, unless you are already drawing Social Security benefits.
You may be like many people who have chosen to delay receiving Social Security payments until at least age 66 to ensure the full monthly payout. But you’ll be sorry if you do the same for Medicare, because there’s a very strict enrollment period that runs from three months before your birthday to three months after you turn 65. If you miss that, you will be penalized, unless you have health insurance through your job or your spouse’s job.
First stop: Medicare, with its helpful Medicare.gov website and its “Medicare and You” booklet, available through the mail or online. Medicare is also easy to reach by phone (as long as you dial correctly) at 800-MEDICARE. If there’s a long wait to talk to a representative, you can leave your number and someone will call you back. Really. It worked for me.
More information — and even one-on-one guidance — is available from your State Health Insurance Assistance Program (SHIP), a federally funded, free counseling service.
Get to know the lingo.
Unless you understand how Medicare is structured, you may not be able to make good decisions about what you’re buying. These are some of the terms you might see:
— Part A of traditional Medicare covers inpatient hospital services, skilled nursing home care and hospice, among other things.
— Part B of traditional Medicare helps cover preventive care and physician and outpatient services, among other things.
— Part D plans are private insurance plans covering prescription drug costs.
— Medicare Advantage is an alternative to traditional Medicare. In this program, private insurance plans are paid by the federal government to provide coverage that is equivalent to original Medicare.
— Private Medigap plans supplement traditional Medicare and help pay some out-of-pocket costs, such as co-payments and deductibles and sometimes emergency medical expenses overseas. These policies are optional, but if you want one, you’re best buying it when you sign up for traditional Medicare. Otherwise, you won’t be guaranteed coverage and may be subject to medical underwriting, through which you could be denied coverage or charged a higher rate for preexisting conditions.
Failing to sign up can be costly.
You may be in for a surprise if you’re among the many baby boomers I’ve encountered who believe Medicare is free. It’s not. Not only is there an annual deductible ($147 for Part B in 2014), but there are also monthly premiums, ranging from $104.90 to $335.70 for individuals. (The exact premium is pegged to your income, generally based on the tax return you filed two years earlier.)
If you don’t sign up in your initial enrollment period or when your job-based coverage ends, you will pay a penalty that will raise your premiums for Medicare Part B and Part D for the rest of your life. Every year you delay signing up for Part B, your monthly premium rises by 10 percent — and missing the deadline by just one month is considered a one-year delay. There is also a waiting period for the coverage to kick in, so you could be without any insurance for several months, perhaps even a year, if you miss the deadline. For Part D, the penalty is 1 percent for every month’s delay. So a year’s delay would add 12 percent to the monthly drug premium base, currently set at $32.42.
Don’t make assumptions.
Perhaps the biggest mistake you can make is assuming that your health insurance will stay the same when you turn 65. Retiree plans can end, and even coverage from some workplace plans ends, especially if you or your spouse is employed by a firm with fewer than 20 employees. You also need to apply for Medicare at 65 if you are on COBRA, the program that allows you to purchase health coverage offered by your employer if you’ve been laid off. You also need to apply even if you are entitled to the military’s Tricare coverage for life.
Don’t rely solely on advice from your spouse or close friends. “You need to look at your own medical needs: doctors, hospitals, drugs,” advises Jennifer Whittaker, operations supervisor for Allsup Medicare Advisor of Belleville, Ill., a company that provides enrollment advice for a fee.
‘Open enrollment’ may be a misnomer.
Once you’ve signed up for Medicare, you should be notified each fall about an open season that allows you to switch plans. But the open enrollment period allows easy switching only for certain plans, not all of them — and that may affect what you do when you turn 65.
Open enrollment does not give you a free pass to move from one Medigap plan to another, for instance. Although some plans (and some states, like New York) do guarantee the ability to make a change, Medicare allows plans to evaluate your health if you try to switch. So if you’ve developed an illness, you may be rejected or face a sharp rate increase. (If you stay with your existing plan, your rates can always rise — but only if they are rising for the plan or group as a whole.)
“If you didn’t pick a benefit you wanted initially, you may not be able to get it in the future,” says Diane Omdahl, co-founder of 65 Incorporated, another for-fee consulting firm based outside Milwaukee.
That’s also the situation you could face if you want to change from a Medicare Advantage plan to traditional Medicare with a Medigap plan. One of Omdahl’s clients who was on a Medicare Advantage plan recently developed diabetes, and he concluded that switching to traditional Medicare with Medigap would work better financially. But his diabetes kept him from finding an affordable Medigap plan. If he had signed up for traditional Medicare with a Medigap plan, he would not have been charged extra when he subsequently developed diabetes.
So what does open enrollment really mean? If you’re on a Medicare Advantage plan, you can switch to another plan. You can also switch Part D drug plans annually. And since both Medicare Advantage and the drug plans change premiums, benefits and providers regularly, it’s important to review your plans yearly.
Consider your health over the long term, not just how you feel now.
Since it may not be easy to switch Medigap plans in the future, many Medicare advisers suggest that if you are choosing a Medigap policy, buy the best coverage you can afford when you sign up.
The cheapest price is not necessarily better.
Consider more than the cost of the premium when you sign up for a Medicare Advantage or Medigap plan. Look at co-payments and deductibles, too. The cheapest premium might not provide you with the cheapest overall plan. Also, review a company’s complaint records as well as its financial stability to hopefully ensure that it will be around as long as you plan to be.
For Medicare Advantage plans and drug plans, the Centers for Medicare & Medicare Services (the agency that runs Medicare) provides a helpful five-star rating system based, in part, on member satisfaction surveys.
Customer satisfaction ratings for Medigap plans are harder to find, but one valuable site for me was Missouri’s Complaint Index for Medigap issuers. (Many of the companies on this list operate nationwide.)
Several companies rate the financial strength of insurance carriers, although you may have to pay to get information. Two of the most frequently cited rating firms are Weiss Ratings and A.M. Best, neither of which charges for basic information.
Make calls and ask questions; you’d be surprised by what you learn.
Once you pick a plan, call and confirm its different points, such as the premium and out-of-pocket limits,” Omdahl advises. “It’s rare, but sometimes the information online isn’t accurate.”
You may also discover added discounts. After I narrowed my search to two Medigap companies, I learned that if I went with the plan that my husband used, we’d both get a 5 percent discount on premiums. None of my research mentioned a “household discount.”
Don’t be afraid to seek help.
In addition to advice from Medicare and your state’s health-insurance assistance program, tools that helped me included the National Council on Aging’s MyMedicareMatters, AARP’s Medicare Question and Answer Tool and the Medicare Rights Center fact sheets. Consumer Reports “Managing Medicare” article also is a valuable primer.
You might also consider seeking advice from an independent insurance agent. But remember, these agents typically talk only about the plans they offer – and they usually receive a commission on the policies they sell.
There’s also a growing list of firms that will help you for a fee. These include:
— 65Incorporated.com, with a fee of $299 for an initial enrollment consultation, $499 for a couple.
— Allsup Medicare Advisor, charging $500 to $850 for a complete initial assessment.
— Goodcare.com, with a $585 initial consultation, $195 more for each additional hour.
— Healthcare Navigation, with consultation fees ranging from $750 to $1,250.
