Waking up on your own time clock. Hitting the gym after rush hour has passed. Meeting friends for lunch. If you’re getting close to retirement, the good stuff is easy to understand. More complex: figuring out health insurance. Here’s what to think about first.
1. When should I start exploring my options?
You can enroll in Medicare three months before your 65th birthday month, but give yourself time to learn what the program offers, says Rebecca Kinney, acting director of the Office of Healthcare Information and Counseling for the Administration for Community Living with the U.S. Department of Health & Human Services. Her advice: Dive in six months before your 65th birthday. You’ll have a seven-month window to sign up, “but prices change, so it doesn’t help to make your decision too early,” Kinney says.
In addition, if you’re already eligible for Medicaid, which offers low-income medical assistance, you may be eligible for Medicare (about 20 percent of the former qualify for the latter). However, rules vary by state so it’s best to check the limitations where you live.
2. How does Medicare work?
Big picture — you’ll decide between the following:
- Original Medicare plans include Hospital (Part A) and Medical (Part B) insurance. You can also sign up for drug coverage (Part D). Original Medicare plans cover any doctor or hospital, but you’ll usually pay out of pocket until you reach a deductible. Thereafter, you’ll pay 20 percent of the approved amount (aka co-insurance). There’s no limit on what you pay out of pocket every year.
- Medicare Advantage plans work like health maintenance organizations, with approved provider networks; drug coverage is usually included. Once you reach the annual limit on out-of-pocket expenses for covered services, you’ll pay nothing for them for the rest of the year.
3. What about costs that aren’t covered?
If you sign up for Original Medicare and you or your partner are still working, you can supplement its coverage with work insurance. Either way, you have the option of adding private Medicare Supplement Insurance, also known as Medigap. The government has licensed some private carriers to sell Medigap, which helps cover co-payments, deductibles and co-insurance expenses under Original Medicare.
4. Who can help me sort through all this?
Federally funded State Health Insurance Assistance Programs (often known as SHIPs) offer certified, unbiased counselors to help you explore Medicare options. Their services are free, and they have offices nationwide.
Plan on at least two meetings to get up to speed, says Kinney — maybe a group overview first and a one-on-one session a month later, when a counselor can help you sign up. To locate the office nearest you, call 877-839-2675 or go to shiptacenter.org and click on “Find Local Medicare Help.”
5. What if I’m planning to retire early or work past 65?
You can’t sign up for Medicare early, but if you leave your job before turning 65, you can stay on a company plan for 18 or 36 months through COBRA (the Consolidated Omnibus Budget Reconciliation Act). Be sure to compare options through the Affordable Care Act and your insurance agent.
If you plan to keep working after 65, Kinney warns, you should still sign up for Medicare if you’re self-employed. “I’ve worked with people who assumed that if they weren’t collecting Social Security yet, they also could wait to sign up for Medicare,” she says. “So they kept paying privately for their health insurance and didn’t sign up.”
The result: a hefty penalty. “As soon as you’re eligible, you’ve got to enroll unless you’re part of an employer plan,” she says.