How to Avoid Mistakes Switching to Medicare from an Exchange Health Plan
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If you get your health insurance on the public market and are nearing age 65, don’t forget about Medicare.
The general rule is that you must enroll when you reach that age, unless you have qualifying coverage elsewhere – and plans through exchanges (federal or state) don’t count.
“You have to be prepared to make this change,” said Karen Pollitz, senior member of the Kaiser Family Foundation. “Otherwise you can face [costs] for being late to enroll in Medicare and for being late to exit the market. “
Of the roughly 12 million people with health insurance coverage in the market, about 3.4 million are aged 55 to 64, meaning some of them are approaching Medicare eligibility. and will need to register.
“If you got a grant on the market plan… Uncle Sam can charge you for all the grant dollars you’ve received since you were 65 and haven’t left that plan,” said Danielle Roberts. , co-founder of the insurance company Boomer Benefits. .
People who are already receiving social security payments, i.e. started receiving these benefits before full retirement age as defined by the government, will usually be automatically enrolled in Medicare, but will still have to cancel their coverage through the market, Pollitz said.
Your initial Medicare enrollment period begins three months before the month you turn 65 and ends three months after (seven months in total).
While most people pay no premium for Part A (hospital coverage), Part B (outpatient care) does not. For 2021, that standard amount is $ 148.50 per month, although high earners pay more.
In addition to Parts A and B, also known as Original Medicare, there is Part D, which covers prescription drugs. It also comes with an additional monthly fee for beneficiaries with higher incomes (see charts).
Some people choose to stick with basic health insurance and combine it with a stand-alone Part D plan and, perhaps, a Medicare supplement plan (aka “Medigap”) . Others choose an Advantage plan (Part C), which includes your Part A and B benefits, and usually Part D, plus a few extras like limited dental and vision benefits.
Late registration penalties are associated with some aspects of Medicare.
For Part B, if you don’t register when you are supposed to, you could face a penalty of a 10% top Party B base monthly premium for each 12-month period you should have been registered but were not. And these penalties are usually for life.
Although Part D is optional, you may face a penalty if you decide you want coverage after not registering when you were first eligible. This late enrollment fee is 1% of the monthly National Base Premium ($ 33.06 in 2021) for each full month you should have been covered but didn’t. Like the Part B penalty, this amount usually lasts as long as you are covered by pharmacare.
Whether you will pay more or less than your current market plan depends on factors including how much financial assistance you have received.
For 2021 and 2022, the grants available in the market are extensive, which means that many more people are eligible for assistance than before they would not have. Some pay little or nothing for premiums and may get help with cost sharing, such as deductibles or co-payments. Of course, if your income is low enough, you may be eligible for reimbursable expense assistance programs under Medicare.
Plus, your Medicare coverage choices also determine what you pay for. Medigap plans come with a monthly premium that can range from under $ 100 to around $ 400, depending at least in part on the specifics of the plan. These policies also typically cover much of the cost-sharing encountered in Medicare Parts A and B, including copayments or coinsurance.
Advantage plans may or may not have a premium on top of what you pay for Part B. However, research Pollitz’s organization shows that half of all Medicare Advantage registrants would incur higher costs for a five-day hospital stay than original Medicare beneficiaries because of the different cost structures. For a 10-day stay, 72% of Advantage registrants would pay more.
“When you’re healthy, Advantage plans are cheaper than original Medicare, but if you get really sick that could change,” Pollitz said.
To compare your drug insurance options or Advantage plans, you can visit the health insurance plan search engine.