Frequently Asked Questions About Coverage

Frequently Asked Questions About Coverage

Frequently Asked Questions When Obtaining Coverage

These are very important issues to consider when deciding which Medicare coverage is right for you. Unlike many other brokers, we take the time to make sure all these issues are addressed, and you know exactly what to expect when the need of medical assistance arises. We will take the time necessary to ensure you understand and are comfortable with your health coverage.

Q When can I sign up for Medicare?

A 1. When you’re turning 65. This is the Initial Enrollment Period (IEP) which is the 7-month period that begins 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65. NOTE: If you’re already receiving Social Security benefits, you’ll automatically be enrolled in Medicare Part A and Part B when you turn 65.

2. After 65 and you’ve been covered by an employer group health plan (your or your spouse’s plan). This is a Special Enrollment Period (SEP). You may want to delay signing up for Part B (and avoid the monthly premium that goes along with it) if you or your spouse has coverage through your current employer. This SEP can be used anytime you or your spouse are still working and covered by the group health plan OR within 8 months of when you or your spouse stop working. NOTE: Most people sign up for Part A at 65 since it’s usually free—although you may want to delay signing up if you plan to continue contributing to a health savings account (to avoid tax penalties).

3. During the General Enrollment Period (GEP). If you have not filed during the other periods, you can still sign up between January 1 and March 31 each year. There is typically a life-long penalty if you sign up during this time.

Keep in mind, if you don’t enroll in Part B when first eligible you may have to pay a late enrollment penalty when you finally do join (unless you qualify for a Special Enrollment Period such as noted in #2).

Q What is the difference between ‘Advantage’ and ‘Medigap’ plans?

A Medicare Advantage, also known as Medicare Part C, is an all-in-one, federally regulated alternative to Original Medicare. These plans are offered by private insurance companies. They bundle hospital coverage, doctor and outpatient services, and often prescription drug coverage into one package. Advantage plans cover everything that Medicare Part A and Part B cover. And, most plans help pay for services original Medicare doesn’t cover, such as routine dental, hearing and vision care. Unlike Medigap plans, Advantage plans have no or low monthly premiums (you still pay Medicare Part B premium). Instead, you pay copays and coinsurance as you utilize services. They are managed care plans, meaning they utilize a provider network and may charge more or may not cover doctors or facilities outside of a plan’s network. And many services require prior authorization by the insurance company. This structure is similar to employer group and individual health plans.

Medigap or Medicare Supplement plans help pay the deductibles, copays and coinsurances of Part A and Part B of Original Medicare. Original Medicare (Part A and B) is your primary insurance and your Medigap is secondary. Part D prescription drug coverage is not included, you must purchase a separate drug plan. Medigap plans are offered by private insurance companies and are federally standardized. This means all “Plan G” Medigaps offer the same coverage regardless of the insurance company you choose. Medigap plans only pay for services covered by Medicare, meaning they do not cover any ancillary benefits such as dental. You pay a monthly premium to the Medigap insurance company (in addition to Medicare Part B premium). This premium generally goes up each year based on your “attained age” and claims experience of the insurance company. When you utilize services, you typically have no copays or coinsurances, just a minimal annual deductible. {NOTE: This is if you choose a Plan G Medigap. Other plans available may have copays, coinsurance and deductibles.} Unlike Medicare Advantage plans, there is no provider network requirement and generally no prior authorization (there are a few treatments that Medicare does require prior authorization for). Original Medicare and your Medigap can be used anywhere in the United States that accepts Medicare.

Q What does “Guaranteed Issue” of a Medicare Supplement (aka Medigap) policy mean?

A Medicare Supplement plans are Guaranteed Issue when you are aging into Medicare or within 6 months of starting Medicare Part B. Guaranteed Issue means that any insurance company you choose must accept you no matter what your health is, and they cannot ask you any medical questions. After 6 months if you apply for a policy, you will be asked medical questions and they could deny you coverage.

There are some additional Guaranteed Issue timeframes such as a Trial Period and leaving an employer group plan. And some states have their own regulations allowing for more generous rules. The rules can be complex. We strongly suggest working with an insurance broker specializing in Medicare to help guide you through the process.

NOTE: You always have Guaranteed Issue into any Medicare Advantage plan.

Q Will Medicare cover me if I travel outside the United States?

A In most situations, Medicare will not pay for health care or prescriptions you get outside the U.S. However, if you have a Medicare Supplement Insurance policy (Medigap) or a Medicare Advantage plan you may have limited “emergency” medical care outside the U.S.

Most Medigap Plans (lettered C, D, F, G, M or N) provide foreign travel “emergency” health coverage. Here’s what you need to know:

  • Lifetime limit of $50,000
  • Plan pays 80% of the billed charges for certain medically-necessary emergency care after you meet an annual $250 deductible
  • Emergency care must begin in the first 60 days of leaving the U.S.
  • Medevac return to the U.S. is not included

(Check your policy or contact your insurance company for specific coverage rules.)

Many Medicare Advantage Plans also cover “emergency” medical care abroad. Coverage varies from plan to plan so check with your insurance company about costs and coverage rules.

Keep in mind most foreign hospitals will not submit claims to your Medigap or Medicare Advantage plan. You’ll pay the cost of care out of pocket and then need to file a claim with your insurance company for consideration of reimbursement.

For added peace of mind, many Medicare beneficiaries choose to purchase travel medical insurance.

Q Can I keep my HSA when I go on Medicare?

A If you enroll in Medicare Part A and/or B you can no longer contribute to your HSA (not you or your employer). This is because HSA contribution rules state that the only health insurance you can have is a HDHP (High Deductible Health Plan). The month your Medicare begins your account overseer should change your HSA contributions to zero. *However, you may continue to withdraw money (tax free) from your HSA after you enroll in Medicare if you use the account for “qualified” medical expenses. This can include medical expenses such as deductibles, copayments, coinsurances and premiums (NOT Medicare Supplement or Medigap premiums).

Whether you should delay enrollment in Medicare so you can continue contributing to your HSA depends on your circumstances. If you work for an employer with fewer than 20 employees, you may need Medicare in order to have primary insurance.  This is because health coverage from employers with fewer than 20 employees pays secondary to Medicare. If you work at this kind of employer and fail to enroll in Medicare, you may have little or no health coverage because your health plan does not have to pay until after Medicare pays. Health coverage from an employer with 20 or more employees pays primary to Medicare, so you may choose to delay Medicare enrollment if you work at this kind of employer and continue putting funds into your HSA.

If you choose to delay Medicare enrollment because you are still working and want to continue contributing to your HSA, you must also wait to collect Social Security retirement benefits. This is because most individuals who are collecting Social Security benefits when they become eligible for Medicare are automatically enrolled into Medicare Part A. You cannot decline Part A while collecting Social Security benefits. The takeaway here is that you would have to delay Social Security benefits and decline Part A if you wish to continue contributing funds to your HSA.

Finally, if you decide to delay enrolling in Medicare, make sure to stop contributing to your HSA at least six months before you enroll in Medicare. This is because when you enroll in Medicare Part A you receive up to six months of retroactive coverage, not going back farther than your initial month of eligibility. If you do not stop HSA contributions at least six months before Medicare enrollment, you may incur a tax penalty.

*NOTE: If you require counseling about HSAs consult a tax professional.

Q What is the Medicare premium “surcharge” and how do I avoid it?

A Medicare beneficiaries with high-incomes may pay extra for their Part B and Part D. This is known as the Medicare Income Related Monthly Adjustment Amount (IRMAA), or a “surcharge”. The premium adjustment is based on your Modified Adjusted Income (MAGI) reported on income tax returns from two years prior. For example, 2021 tax returns are used to determine whether you pay the surcharges in 2023.

You can appeal surcharges by filing a re-determination request if you’ve had a life-changing event that has subsequently reduced your income. Examples include work stoppage (retirement), work reduction, death of your spouse, divorce and others as defined by the Social Security Administration. NOTE: MAGI is not just your job or Social Security income; it includes all taxable income such as withdrawals from retirement accounts and investments, rental income, property sale, inheritance, etc).

Be careful about financial moves that could increase your adjusted gross income and make you subject to or increase your surcharge. Transactions such as rolling over a traditional IRA to a Roth IRA or making big withdrawals from tax-deferred retirement accounts can have an impact. It’s best to seek out professional guidance from your Financial Advisor and/or CPA before any significant financial move that may increase your income.

Did You Know?

Recent studies have shown that the average Medicare recipient spends over $500 too much on their prescription drugs? When placed in an appropriate Prescription Drug Plan, we can eliminate this overpayment.