Medicare Enrollment Information 2018

As a courtesy to our clients who are approaching their 65th birthday, we have put together a few pieces of information that we thought may be helpful for you as you make the transition to Medicare.

Below you will find:

I.  Preparing for Medicare Enrollment

II.  A Fact Sheet for Medicare

III. What Does Medicare Part A Insurance Cover?

IV. What Does Medicare Part B Insurance Cover?

V.  What Does Medicare Part C Insurance (i.e. Medicare Advantage) Cover?

VI. What Does Medicare Part D Insurance Cover

MainStreet Investment Group LLC will not be able to advise you on your health care decisions, but by giving you this summary on Medicare, you can properly plan for the decisions you will need to make when your enrollment time comes.

We hope the information below will give you guidance as you research your options and choices.  If you would like more information, please visit Medicare’s website https://www.medicare.gov/.

 

I.  Preparing for Medicare Enrollment
Presented by Randy Plantenberg  

It’s a few months before you turn 65. You check the mail and find the box overflowing with materials from companies discussing Medicare enrollment, Medicare Advantage plans, and other pharmacy-related plans. The amount of information is overwhelming—how will you possibly sort through it all and figure out what you need to do?

Although many third-party providers offer legitimate products and services, it’s often difficult to differentiate between these marketing materials and official mailings from the Centers for Medicare and Medicaid Services. As the Medicare enrollment period approaches, you may be at risk of making poor decisions if you haven’t mapped out a plan ahead of time.

Steps to take before you turn 65

To help ensure that you make the best Medicare choices, it’s a good idea to check the following items off your list before you turn 65.

Mark your calendar. When you turn 64, mark the calendar for your Medicare enrollment period. If you already receive social security or Railroad Retirement Board benefits, you will automatically be enrolled in Part A and Part B coverage on the first day of the month you turn 65. If not, you may enroll during the three months before your 65th birthday or during the three months after you turn 65. If you don’t sign up for Part A, Part B, or both when you are first eligible, you can enroll between January 1 and March 31 every year, but you may be required to pay a penalty for late enrollment.

Note the special enrollment period. If you’re currently covered by group insurance through an employer or a spouse’s employer, you may be able to delay Medicare enrollment; talk to your employer to determine how the group plan coordinates with Medicare. You may sign up without penalty while you are covered by a group health plan or during the eight-month period that begins the month after your employment ends or the coverage ends, whichever comes first. Note that COBRA and retiree health plans are not considered “insurance based on current employment” and are not eligible for the special enrollment period when that coverage ends.

Research Medigap and Medicare Advantage plans. It’s wise to look into how Medigap and Medicare Advantage plans work and decide if either type of plan would benefit you. Here’s an overview:

  • Sold by private companies, Medigap policies—also called Medicare Supplement Insurance policies—can help pay for some of the health care costs that original Medicare doesn’t cover (e.g., copayments, coinsurance, and deductibles). Medigap policies require you to pay premiums, which are standardized according to federal and state laws.

  • Much like HMOs or PPOs, Medicare Advantage plans (sometimes called Part C or MA plans) are health plans offered by private companies approved by Medicare. These plans provide Part A (hospital insurance) and Part B (medical insurance) coverage, not original Medicare. You can search and compare Medicare Advantage plans on the Medicare website at www.medicare.gov/find-a-plan/questions/home.aspx.

 

Talk to your health care providers. Unfortunately, not all health care providers accept Medicare, which is why it’s essential to double-check that your physician does. Also be sure to ask if the provider accepts assignment, which means he or she will accept the Medicare-approved amount as full payment for services. This is important because, depending on the type of Medicare plan you choose to enroll in, some providers may not restrict their fees to the Medicare limit. Another benefit of assignment is that you won’t have to pay up front for treatment, file a claim form, and wait for reimbursement. Instead, the health care provider will file your claims, and you will be billed only for your share of the costs, such as the deductible and coinsurance amounts.

To locate doctors near you who accept assignment, you can use Medicare’s provider search, available at www.medicare.gov/find-a-doctor/provider-search.aspx.

Seek advice from a trusted resource. When faced with an array of Medicare choices, it’s easy to become confused and frustrated with the enrollment process. Unfortunately, many people aren’t aware of the decisions they will need to make or the factors they should consider. A knowledgeable financial advisor can answer your questions about Medicare, guide you through the enrollment process, and help you make the most of your benefits. By planning ahead and working with a trusted advisor, you’ll pave the way for a smooth transition to Medicare.

###

Randy Plantenberg is a financial advisor located at MainStreet Investment Group LLC, 1411 N. 4th Street Suite 103, Tomahawk, WI  54487. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 715-453-0722 or at randy@mainadvisor.com.

© 2016 Commonwealth Financial Network®

 

 

 

II.  A Fact Sheet for Medicare

Presented by Randy Plantenberg

Medicare is a federal health insurance program that covers certain medical services and supplies in hospitals and doctors’ offices. The insurance is provided to U.S. citizens and permanent residents who must meet one or more of the following criteria:

  • Are age 65 or older and eligible for social security benefits or for benefits from the Railroad Retirement Board (RRB)

  • Have been receiving social security disability income for at least 24 months

  • Qualify for disability benefits because of amyotrophic lateral sclerosis (ALS, aka Lou Gehrig’s disease)

  • Have end-stage renal disease

Medicare covers three categories of health care expenses:

  1. Part A: Hospital insurance. Part A helps to cover inpatient care in hospitals, skilled nursing facilities, and religious nonmedical health care institutions; hospice health care services; and home health care services. Most individuals who qualify for Medicare receive Part A at no cost, as they likely paid for it via Medicare taxes while working. Those who don’t qualify for “premium-free Part A” may buy it through the Social Security Administration; the premium amount depends on an individual’s income.

  2. Part B: Medical insurance. Part B helps to cover medically necessary services, including doctors’ services and tests, hospital outpatient care, home health services, durable medical equipment, and some preventive services to help maintain health and to keep certain illnesses from worsening. Part B premiums are paid monthly, and most beneficiaries are charged a standard premium amount. If you miss the initial enrollment period, you may incur a late enrollment penalty.

  3. Part D: Prescription drug coverage. Part D is a prescription drug coverage plan provided by private companies contracted by Medicare. Enrollment is not automatic. If you do not have creditable prescription drug coverage, you should consider getting Part D as soon as you are eligible. If you join a Medicare prescription drug plan later than your initial enrollment period, you may incur a late enrollment penalty.

Coverage choices

  1. Original Medicare. This coverage includes Part A and Part B, with the option to add Part D. It allows the most flexible choice of doctors, hospitals, and other providers. You can purchase supplemental insurance coverage, known as Medigap, to pay for certain out-of-pocket costs not covered by Original Medicare, such as deductibles and copayments.

  2. Medicare Advantage (Part C). This choice includes health plans run by Medicare-approved private insurance companies and is similar to an HMO or PPO. These plans include Part A and Part B, and most include Part D at an extra cost. Additional coverage for vision, hearing, and dental services, in addition to health and wellness programs, may be available.

    For most Medicare Advantage plans, you must use network doctors, hospitals, and other providers. Monthly premiums and out-of-pocket costs vary. You can switch between Medicare Advantage and Original Medicare, or to a different Medicare Advantage plan, but only during certain times of the year.

Keep in mind that some items and services are not covered by Original Medicare:

  • Acupuncture

  • Cosmetic surgery

  • Dentures

  • Hearing aids

  • Long-term care

  • Routine dental care

  • Vision care

Some Medicare Advantage providers, however, may cover certain dental and vision care services.

Enrolling in Medicare

Automatic enrollment. The following individuals are automatically enrolled in Medicare Part A and Part B:

  • Those who are 65 years old and currently receive social security benefits or benefits from the RRB

  • Those who are under age 65 who receive disability benefits from social security or from the RRB for 24 months

  • Those who have ALS

If you are automatically enrolled, a Medicare card will be mailed to you three months before your 65th birthday or three months before your 25th month of disability benefits. You can decline Part B coverage before the date it takes effect. If you do not want to pay Part B premiums, follow the instructions that come with the card and return it. If you need help paying Medicare premiums, contact the Social Security Administration.

Active enrollment. You must take action to enroll in Medicare if:

 

  • You do not receive social security or RRB benefits when you turn 65

  • You have end-stage renal disease

     

Enrollment period. The time frame for enrolling in Medicare covers the three months before your 65th birthday, the month you turn age 65, and the three months following your 65th birthday. If you don’t enroll during this initial period, you may do so between January 1 and March 31 every year thereafter. If you sign up late, you run the risk of having to pay a higher premium because of a late-enrollment penalty.

If you or your spouse are still working and are covered by employer-provided health insurance, you can keep your current plan and sign up for Medicare without penalty at a later date. Talk to your employer about how your current health plan coordinates with Medicare.

Completing your application for enrollment. You can complete your Medicare application in one of three ways:
 

  1. Online at www.socialsecurity.gov/medicare/apply.html

  2. By printing the form and bringing it to your local Social Security office

  3. By phone or in person at any Social Security office

If you were automatically or actively enrolled in Medicare, you may choose to join the Medicare Advantage plan after you receive your Medicare number and after the date your Part A and/or Part B coverage starts. You can do this by completing an application or visiting www.medicare.gov.

Additional information on Medicare can be found on the Medicare & You portal at www.medicare.gov/medicare-and-you/medicare-and-you.html.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

###

Randy Plantenberg is a financial advisor located at MainStreet Investment Group LLC, 1411 N. 4th Street Suite 103, Tomahawk, WI  54487. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 715-453-0722 or at randy@mainadvisor.com.

© 2017 Commonwealth Financial Network®

 

 

III.  What Does Medicare Part A Insurance Cover?

Presented by Randy Plantenberg

Medicare Part A insurance covers inpatient care in a hospital or a skilled nursing facility, as well as hospice care. It provides limited coverage for nursing home and home health services.

How—and when—do I enroll?

There are specific enrollment guidelines for Medicare, and you must sign up before the enrollment deadline to avoid incurring a penalty.

  • Automatic: Enrollment in Part A is automatic if you receive social security, Railroad Retirement Board disability, or retirement benefits at least four months before your 65th birthday.
  • Initial enrollment period: If you are not automatically enrolled, you must enroll before the enrollment deadline. The initial seven-month enrollment period is the three months preceding your 65th birthday, the month of your birthday, and three months following your birthday.
  • General enrollment period: If you didn’t sign up when you were first eligible, the annual Medicare Part A and/or Part B general enrollment period begins January 1 and ends March 31.
  • Special enrollment period: The special enrollment period applies when your employment ends. If you continue to work after your 65th birthday and have employer health insurance, you must enroll in Part A and/or Part B within eight months of your last date of employment. The eight-month period also applies to spouses who are eligible for Medicare and used employer health insurance. Enrolling in Part B during the special enrollment period generally avoids the 10-percent penalty assessed for late enrollment.

You may enroll online at www.medicare.gov or in person at a local social security office.

For more information about Medicare, visit the Getting Started with Medicare page at www.medicare.gov/people-like-me/new-to-medicare/getting-started-with-med....

What are my out-of-pocket expenses?

Part A premium and deductible costs are listed within the Your Medicare Costs tab at www.medicare.gov. Click the “Medicare 2017 costs at a glance” link for in-patient deductible and coinsurance rates.

  • Part A premiums: Most people don’t pay monthly premiums for Medicare Part A. If you or your spouse paid FICA taxes for 40 quarters of coverage (10 years), you should be eligible to receive “premium-free Part A” insurance.
    • Government employees: Federal employees hired after January 1, 1983, should be eligible for premium-free Part A insurance.

    • State and local employees: State and local employees hired after April 1, 1986, should be eligible for premium-free Part A insurance.

  • Hospital deductible: The Part A deductible applies to each “benefit period.” A benefit period begins the first day of in-patient care and ends 60 days after you have not been in a hospital or skilled nursing facility. If you have multiple Part A benefit periods within the same year, the deductible would be charged for each benefit period.
  • Coinsurance: Part A has separate coinsurance charges for hospital and skilled nursing facility care.
  • Hospital care:

    • Days 1–60: $0 coinsurance charge

    • Days 61–90: Daily coinsurance charges begin

    • Days 91–150: Daily coinsurance charges increase

    • Day 151+: You pay all charges

  • Skilled nursing facility care:

    • Days 1–20: $0 coinsurance charge

    • Days 21–100: Daily coinsurance charges begin

    • Days 100+: You pay all charges

Can I contribute to a health savings account (HSA) once I’ve enrolled in Medicare?

You cannot contribute to an HSA if you’ve enrolled in Medicare, although enrollment does not preclude future withdrawals from an HSA. It is recommended that you stop contributing to your HSA six months prior to social security and/or Medicare enrollment to prevent the assessment of penalties and deduction loss if your Medicare coverage enrollment is backdated. A spouse who is not enrolled in Medicare can continue to contribute to his or her HSA.

What else do I need to know about Medicare Part A coverage?

  • Hospital care: Part A coverage includes acute care hospitals, in-patient rehabilitation facilities, and in-patient mental health facilities. You have 60 lifetime reserve days. You begin to use lifetime reserve days on day 91 of hospital admission.

  • Skilled nursing facility care: It is important to confirm your hospital admission status and to distinguish “observation” status from “in-patient” status. Part A will not cover skilled nursing facility charges unless you have had in-patient hospital status for at least three consecutive days before transferring to the facility. In addition, Part A does not cover “custodial care,” even if you receive those services in a skilled nursing facility.

  • Hospice care: Part A hospice coverage includes medical care, nursing services, prescription drugs, durable medical equipment, respite care, and grief counseling. Your physician must certify that your illness is terminal and that death is expected within six months. Your physician may recertify the terminal condition if you outlive the initial six-month period.

Please note: Original Medicare Parts A and B provide no coverage when you travel internationally. You will need to purchase additional insurance for coverage outside of the U.S.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

###

Randy Plantenberg is a financial advisor located at MainStreet Investment Group LLC, 1411 N. 4th Street Suite 103, Tomahawk, WI  54487. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 715-453-0722 or at randy@mainadvisor.com.

© 2017 Commonwealth Financial Network®

 

IV.  What Does Medicare Part B Insurance Cover?

Presented by Randy Plantenberg

Medicare Part B insurance covers doctor services, outpatient services, and durable medical equipment.

How—and when—do I enroll?

There are specific enrollment guidelines for Medicare, and you must sign up before the enrollment deadline to avoid incurring a penalty.

  • Automatic: Enrollment in Part B is automatic if you receive social security, Railroad Retirement Board disability, or retirement benefits at least four months before your 65th birthday.
  • Initial enrollment period: If you are not automatically enrolled, you must enroll before the enrollment deadline. The initial seven-month enrollment period is the three months preceding your 65th birthday, the month of your birthday, and three months following your birthday.
  • General enrollment period: If you didn’t sign up when you were first eligible, the annual Medicare Part A and/or Part B general enrollment period begins January 1 and ends March 31.
  • Special enrollment period: The special enrollment period begins when your employment ends. If you continue to work after your 65th birthday and have employer health insurance, you must enroll in Part A and/or Part B within eight months of your last date of employment. The eight-month period also applies to spouses who are eligible for Medicare and used employer health insurance. Enrolling in Part B during the special enrollment period generally avoids the 10-percent penalty assessed for late enrollment.

You may enroll online at www.medicare.gov or in person at a local social security office.

For more information about Medicare, visit the Getting Started with Medicare page at www.medicare.gov/people-like-me/new-to-medicare/getting-started-with-med....

What are my out-of-pocket expenses?

Part B premium and deductible costs are listed within the Your Medicare Costs tab at www.medicare.gov. Click the “Medicare 2017 costs at a glance” link for in-patient deductible and coinsurance rates.

  • Part B premiums: You pay a premium each month for Part B insurance. Most people pay the standard premium, which is determined by your modified adjusted gross income (MAGI) and income tax filing status (single, joint, married filing separately). MAGI includes taxable wages and self-employment income; social security retirement benefits; social security disability benefits; retirement and pension income; alimony, capital gains; and investment, rental, and royalty income. It is your reported MAGI from the two tax years before you enroll that determines your means-tested premium. If your MAGI is above a certain threshold, you pay the standard premium plus a surcharge called an income-related monthly adjustment amount (IRMAA). Your premium cost is reevaluated annually.
  • Deductible: The Part B deductible is set each year by the Centers for Medicare & Medicaid Services. You usually pay 20 percent of the Medicare-approved amount after your deductible is met.

Can I contribute to a health savings account (HSA) once I’ve enrolled in Medicare?

You cannot contribute to an HSA if you’ve enrolled in Medicare, although enrollment does not preclude future withdrawals from an HSA. It is recommended that you stop contributing to your HSA six months prior to social security and/or Medicare enrollment to prevent the assessment of penalties and deduction loss if your Medicare coverage enrollment is backdated. A spouse who is not enrolled in Medicare can continue to contribute to his or her HSA.

What else do I need to know about Medicare Part B coverage?

  • Hold harmless rule: If you collect social security benefits and your Part B premiums are deducted from those benefits, you may be protected by the hold harmless provision. This provision ensures that Part B premiums will not increase unless the social security cost-of-living adjustment covers that amount. The rule does not apply if you are a new enrollee or you are a higher income recipient paying surcharges under IRMAA. The provision also would not protect you if you were enrolled in a Medicare Savings Program.
  • Late-enrollment penalty: Failure to enroll in Part B during the initial enrollment period may result in a 10-percent penalty for each full year (12 months) that you do not enroll when you are eligible. The 10-percent penalty is permanent; however, if you are covered under a group health plan from an active employer, you may avoid this penalty. Please note: COBRA and retiree health coverage are not considered active employer group health coverage and will not exempt you from this penalty.

(Example: Alice’s initial enrollment period ends in November 2016. She does not enroll in Part B until March 2017.   Alice would not incur a penalty because a full year did not lapse between her initial enrollment period and her enrollment during the general enrollment period.)

  • Working after age 65: If you work after age 65, you may maintain your employer’s group health insurance and delay enrolling in Part B if the employer has 20 or more employees. (Please note: Employer health insurance may be the secondary payer to Medicare if the employer has fewer than 20 employees, which means you could be responsible for primary care coverage.)
  • Don’t forget to sign up for Medicare during the special enrollment period within eight months after your employment ends. (As noted above, COBRA and retiree health coverage are not considered active employer group health coverage.) The eight-month period also applies to spouses who are eligible for Medicare and used employer health insurance. Enrolling in Part B during the special enrollment period will generally avoid the 10-percent penalty.

    As you approach age 65, it is important to review your health insurance to determine how the plan coordinates payment with Medicare and other coverage. This will help you make an informed decision regarding Medicare coverage.

  • Federal Employees Health Benefits Program (FEHBP): If you are a retired federal employee—or you are about to retire—you can maintain a FEHBP without enrolling in Part B. If you discontinue your FEHBP coverage, however, you would need to apply for Part B within eight months of ending coverage to avoid incurring the 10-percent premium penalty.

Please note: Original Medicare Parts A and B provide no coverage when you travel internationally. You will need to purchase additional insurance for coverage outside of the U.S.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

Randy Plantenberg is a financial advisor located at MainStreet Investment Group LLC, 1411 N. 4th Street Suite 103, Tomahawk, WI  54487. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 715-453-0722 or at randy@mainadvisor.com.

© 2017 Commonwealth Financial Network®

 

V.  What Does Medicare Part C Insurance (i.e., Medicare Advantage) Cover?

Presented by Randy Plantenberg

Medicare Part C is a Medicare-approved, private health insurance plan. Part C, also known as a Medicare Advantage plan, is an alternative to Original Medicare.

How—and when—do I enroll?

  • Initial enrollment: The initial seven-month enrollment period is the three months preceding your 65th birthday, the month of your birthday, and three months following your birthday.
  • Disabled individuals receiving social security or Railroad Retirement Board disability benefits:  

               Under Age 65: The initial Part C enrollment period begins 21 months after you start receiving disability

                                      benefits and ends 28 months after you start receiving disability benefits. (Remember that

                                      eligibility for Medicare begins 24 months after you start receiving disability benefits.)

                At Age 65: The initial seven-month enrollment period applies.

 

  • Open enrollment period: Open enrollment begins October 15 and ends December 7. During the annual enrollment period, you can enroll in a Part C plan or choose a different Part C plan. Coverage under the new Part C plan begins January 1 of the following year.

  • Annual disenrollment period: The annual disenrollment period begins January 1 and ends February 14.

                If you discontinue a Part C plan, you can return to Part A and Part B coverage.  Part A and Part B coverage starts      the first day of the month after you cancel the Part C plan.

                If you discontinue a Part C plan, you can enroll in a stand-alone Part D prescription plan.  Part D coverage begins the first day of the month after the prescription plan receiveds your enrollment form.

  • Special enrollment: The special enrollment period begins when you move from a Part C plan’s service area or you end coverage through an employer’s health insurance.

                Generally, special enrollment periods are for two full months.  The two-month period begins the month after you terminate your prior health insurance.

If you discontinue a Part C plan and don't enroll in a new Part C plan withing two months, you will be reenrolled automatically in traditional Part A and Part B plans.

What are my out-of-pocket expenses?

The Centers for Medicare and Medicaid Services approve the plans that are offered by private insurance companies. Medicare pays a fixed amount to the private insurer for the coverage provided.

  • Part C includes Part A hospital insurance and Part B physician insurance. Part C plans may also include Part D prescription drug coverage. In addition, Part C plans may offer benefits such as dental, vision, and hearing.

  • Your expenses will vary by plan. Variable costs include monthly premiums, deductibles, copayments, and out-of-network charges.

    • Although Part C covers physician insurance, you still must enroll in Part B and pay the Part B premium.

What else do I need to know about Medicare Part C coverage?

  • There are five types of Part C plans: 

  1. Health maintenance organizations (HMOs)

  2. Preferred providor organizations (PPOs)

  3. Special needs plans (SNP)

  4. Private fee-for-service (PFFS)

  5. Medical Savings Account (MSAs).

  • In addition to plan costs and service-area restrictions, there are several factors to consider when selecting a Part C plan.

  1. Part C plans, particularly HMOs and PPOs, may require you to use in-network providers or to obtain referrals prior to appointments with specialists. You must verify whether your Part C plan will cover the charges from out-of-network providers.

  2. Part C plans may change providers within their networks at any time. Likewise, health care providers may choose to leave a Part C plan’s network.

  3. Not all Part C plans offer prescription drug coverage. For example, MSA plans do not. If your plan does not include prescription drug coverage, you must enroll in a separate Part D plan.

  4. Different Part C plans have different out-of-pocket limits. Once you meet your out-of-pocket limit, you will not incur charges for covered services for the remainder of that plan year.

  • With the exception of end-stage renal disease, Part C plans are available to individuals with preexisting conditions.

  • You can search for Part C plans in specific locations using the online tool at www.medicare.gov/find-a-plan/questions/home. You may further personalize this search by including your Medicare number and date of birth.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

###

Randy Plantenberg is a financial advisor located at MainStreet Investment Group LLC, 1411 N. 4th Street Suite 103, Tomahawk, WI  54487. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 715-453-0722 or at randy@mainadvisor.com.

© 2017 Commonwealth Financial Network®

VI.  What Does Medicare Part D Insurance Cover?

Presented by Randy Plantenberg

Medicare Part D offers prescription drug coverage.

How—and when—do I enroll?

Unlike Part A and B, your enrollment in Part D is not automatic. You will need to apply for Part D insurance during the appropriate enrollment period to avoid a potential penalty.

  • Initial enrollment period: The initial seven-month enrollment period is the three months preceding your 65th birthday, the month of your birthday, and three months following your birthday.
  • Disabled individuals receiving social security or Railroad Retirement Board disability benefits: Enrollment is not automatic.
  • Under Age 65: The seven-month enrollment period for disabled persons under age 65 begins three months before the 25th month of receiving benefits, includes the 25th month, and ends three months after the 25th month of receiving disability benefits.

  • At Age 65: The initial seven-month enrollment period applies.

  • Open enrollment period: Open enrollment begins October 15 and ends December 7.
  • Annual disenrollment period: If you’re enrolled in a Medicare Advantage plan, you may disenroll from it and then enroll in Original Medicare coverage (Part A, B, and D) during the period from January 1 to February 14.

What are my out-of-pocket expenses?

Private health insurers offer two types of prescription coverage: stand-alone prescription drug plans (PDPs) and Part C Advantage plans. Stand-alone PDPs are for enrollees with traditional Part A and Part B insurance. Part C (Medicare Advantage) plans may offer prescription coverage as part of their managed care benefits.

  • Premiums vary by plan.
  • Part D has four coverage phases; out-of-pocket costs depend upon your coverage phase. If your plan has a deductible, you start at phase 1; if not, you begin at phase 2. You continue progressing to each coverage phase when your out-of-pocket costs reach a certain amount.

               Phase 1: Annual deductible—You pay 100 percent of all medication costs until your out-of-pocket costs reach the annual deductible.

               Phase 2: Initial coverage—Once you’ve met your annual deductible, you and your insurance plan pay medication costs until the shared total costs reach a certain amount.

               Phase 3: Coverage gap (a.k.a., “the donut hole”)—Once you’ve reached the limit in phase 2, you typically pay 40 percent–51 percent of the plan’s cost for drugs until you reach a certain amount.

               Phase 4: Catastrophic coverage—Once you’ve reached the limit of out-of-pocket costs in phase 3, you pay only a small coinsurance or copayment for covered prescription drugs for the remainder of the year.

  • The monthly Explanation of Benefits is a notice that details the amount spent by the insurance company when you’ve received medical services or items.
  • Each Part D plan has a list of prescriptions it covers, known as the formulary. Prescriptions within the formulary are categorized within tiers, and each tier has an associated cost.
  • Total or true out-of-pocket costs (a.k.a., TrOOP costs) include Part D deductibles and costs you paid during the initial coverage and coverage gap phases. The TrOOP does not include Part D premiums and costs for prescriptions that are not listed in your plan’s formulary.

What else do I need to know about Medicare Part D coverage?

  • Late enrollment penalty: Failure to enroll during the initial enrollment period may result in a 1-percent penalty for each month that you are eligible for Part D but do not enroll. The 1-percent penalty is added to the Part D premium.
  • Creditable coverage exception: Creditable prescription coverage is equal to or exceeds the standard coverage under a Part D plan. An employer health insurance plan with prescription coverage typically qualifies as a creditable coverage exception. Please note: Enrollment in a Part D plan must occur within 63 days after creditable coverage ends. COBRA and retiree health plans may qualify as credible coverage for Part D. Check with your insurance provider to see whether your plan would qualify.
  • If you have COBRA: If COBRA offers creditable coverage, you are not required to enroll in Part D until 63 days after your COBRA coverage ends.
  • State Health Insurance Assistance Programs (SHIPs): SHIPs offer free counseling on the costs, coverage, and formularies of Part D plans. Information on each state’s SHIP program is available at www.shiptacenter.org.
  • Medicare Plan Finder: There is an online tool at www.medicare.gov that compares drug-specific plan options within your state. Click the Find health & drug plans button on the homepage to access it.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

###

Randy Plantenberg is a financial advisor located at MainStreet Investment Group LLC, 1411 N. 4th Street Suite 103, Tomahawk, WI  54487. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 715-453-0722 or at randy@mainadvisor.com.

© 2017 Commonwealth Financial Network®