Individuals contact Stateside Insurance Services prior to turning 65 and ahead of qualifying for Medicare with a high degree of anguish by the awareness that they are about to transition from adulthood to becoming a senior citizen. Stateside’s response usually changes the tenor of the call by informing the caller they are about to have a significant increase in benefits, a simplification of insurance coverage and a reduction in premium cost.
Medicare enrollment will probably be the last major health insurance decision that an individual must make and because it is so important it is best to do it right the first time. Medicare enrollment and the subsequent Medicare Supplement enrollment is not complicated if you understand the basics – What, Why, When and How?
What Is Medicare
Medicare is insurance coverage provided by the federal government for individuals over 65 and those under 65 who qualify based on Social Security disability or End Stage Renal Disease diagnosis.
President Lyndon B. Johnson signed Medicare into law on July 30, 1965. Initially, 19 million citizens were enrolled in the program. Now, more than 50 years later, that number has increased dramatically to more than 57 million or 18% of the U.S. population. Enrollment is expected to hit 64 million in 2020 and 81 million in 2030 as 10,000 baby boomers reach age 65 each day.
Medicare is divided into three (3) forms of coverage. Medicare Part A provides benefits during a hospitalization. Medicare Part B covers medical services related to doctors, labs, x-rays, imaging, durable medical equipment, or dialysis. Medicare Part D is coverage for prescription drugs purchased at a retail pharmacy or mail order pharmacy.
Why Enroll In Medicare?
The easy answer is because you have paid for it during your working career. You may have not looked closely at your pay stub, but you have been paying for Medicare Part A during your working career. Your payroll has been subject to a Medicare tax, which in 2020 will be 1.45%. All of the Medicare tax you have paid over the years will cover your Medicare Part A premium.
Another reason to enroll in Medicare is because it is widely accepted and is portable throughout the U.S. Hospital participation in Medicare approaches 97% of all U.S. hospitals. Physician participation is not as high – nationally 90% of primary care physicians and 80% of family physicians accept Medicare. Texas Medical Association reports that 60% of Texas member physicians accept Medicare.
Medicare is also more cost effective than your insurance coverage from either an employer or coverage from the individual market. Coverage for individuals older than 60 in the employer group market can exceed $800 per month. However, since the employer typically pays 50% of the employee’s premium the true cost of group coverage is not known until C.O.B.R.A. is offered. Individuals accessing coverage in the individual market can experience premiums between $800 and $1,400 per month.
Since you have been paying for Medicare during your working career the premiums are much more favorable. Medicare Part A (hospital) has no premium. Medicare Part B (doctors and other services) premium in 2020 is $144.60 unless you are subject to means testing based on income. Medicare Part D, depending on your prescription usage, should be around $50 per month including out-of-pocket prescription costs. The final cost component is the Medicare Supplement Plan G coverage, which depending on the carrier will be around $130 per month.
Under Medicare with a Medicare Supplement your total costs will be approximately $325. What is often overlooked when evaluating Medicare costs is the combination of Medicare and the Medicare Supplement Plan G provides the insured with zero healthcare costs after the $198 Medicare Part B deductible is paid. Medicare and the Medicare Supplement Plan G will pay all costs of Medicare approved benefits. Group coverage or individual coverage will have deductibles ranging from $1,000 to $6,500, maximum out-of-pocket costs ranging from $4,500 to $8,150, and copays for other services.
When Do You Enroll In Medicare?
You can enroll in Medicare during the Initial Enrollment Period which is 90 days before your 65th birthday, the month you turn 65 and 90 days after your birth month. The effective date of Medicare coverage will be no sooner than the first day of your birthday month. For example, if you turn 65 in August, the Initial Enrollment Period begins May 1 and will end on November 30. The Medicare Part B effective date depends on your birthdate and which month you complete your Medicare enrollment.
Enroll Effective Date
90-Days Before Your Birth Month First Day of Birth Month
During Birth Month First Day of Month Following Birth Month
1 Month After Birth Month First Day3 Months Following Birth Month
2 Months After Birth Month First Day 5 Months Following Birth Month
3 Months After Birth Month First Day 6 Months Following Birth Month
For individuals born on the first day of the month, the Part B effective date can be as early as the first day of the previous month.
It is very important that you do not terminate current coverage until you can confirm your Medicare Part A and Part B effective dates in order to avoid a potential gap in coverage.
If you fail to enroll in Medicare during the Initial Enrollment Period you have another enrollment period referred to as the General Enrollment Period, but the Medicare effective dates are not as favorable. The General Enrollment Period is each year between January 1 and March 31, but your Medicare effective date will be July 1. If you turn 65 in January and fail to enroll in Medicare by April 30, you will need to wait 14 months before your Medicare effective date of July 1 the following year.
If you delay Medicare enrollment to a General Enrollment Period, you will be subject to a 10% fine for each 12-month period you failed to enroll in Medicare Part B. The penalty will be assessed on your Medicare Part B premium and will be charged for as long as your have Medicare Part B.
How Do You Enroll In Medicare?
The Centers for Medicare and Medicaid Services (CMS) does an excellent job with enrolling individuals in Medicare with a very straightforward process. You have three (3) options for Medicare enrollment but each option starts with Social Security and not Medicare.
Online – you can go to https://www.ssa.gov/benefits/medicare/. In order to complete the online enrollment, you should create a “My Social Security” account if you don’t already have one. The online option is best if you are electing to receive Social Security benefits.
Phone Enrollment – call Social Security at (800) 772-1213, Monday through Friday, 8:00 a.m. to 5:30 p.m. CST. Social Security will establish an appointment time in the future to contact you by phone to initiate the enrollment process.
In Person – you can go to your local Social Security office and complete the application in person. You should plan to arrive at the Social Security office early and be prepared for a lengthy wait. You can use Social Security Office Locator to locate the closest Social Security office. Information that you should have for your meeting at the local Social Security office includes:
- Legal name as it appears on your Social Security card or “My Social Security” account.
- Telephone number
- Social Security number
Once you receive your Medicare Beneficiary Identifier (MBI) for Part A and Part B you can submit your application for a Medicare Supplement policy and Medicare Part D coverage.
The Medicare identifier number changed effective April 1, 2018. The format was changed from an individual’s Social Security number with an alpha character on the end to a unique, randomly assigned number comprised of 11 alpha-numeric characters. The change was made to reduce the potential for fraud, eliminate medical identity theft and protect financial information of Medicare enrollees.
Who Is IRMAA?
IRMAA stands for Income Related Monthly Adjustment Amount and can increase your Medicare Part B premium that is paid to the federal government. IRMAA was passed in 2007 and applied to the Part B premium and was later applied to Medicare Part D as part of the ACA in 2011.
IRMAA is an extra charge levied on individuals with incomes over $87,000 or married couples filing jointly with incomes over $174,000. Only 5% of Medicare enrollees are impacted by IRMAA but those who are subject to the surcharge were not aware of it and what the basis was for the charge.
For Medicare beneficiaries that do not pay IRMAA, Medicare pays approximately 75% of the cost of Medicare Part B. The Part B premium paid by individuals represents the remaining 25% balance. Beneficiaries with higher incomes pay a higher percentage of the total. The percentage of Medicare Part B premiums paid by higher income individuals can represent 35%, 50%, 65% or even 80% of the total cost of Medicare Part B.
In addition to Medicare Part B, IRMAA is also assessed on the Medicare Part D premium. The surcharge is added to the premium regardless of the Medicare Part D plan selected.
Income for the IRMAA assessment is based on your tax return from two years ago and changes each year based on a two-year look back. The income amount is based on your Modified Adjusted Gross Income (MAGI).
Medicare Supplement and Medicare Part D Coverage
Although Medicare was created by President Lyndon B. Johnson in 1965, Medicare Supplement plans were not available until 1980 with passage of the Section 507 of the Social Security Disability Amendments, also as the “Baucus Amendment.”
Originally Medicare Supplement standards were voluntary but federal standards for Medicare Supplement plans were adopted with the Omnibus Budget Reconciliation Act of 1990. With passage of the legislation 10 standardized Medicare Supplement were mandated.
Medicare did not cover prescriptions outside of hospitals or doctor’s offices until January 1, 2006. Prescription benefits assigned to Medicare Part D were authorized under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 also knows as the “MMA.”
Medicare Part D differs from Medicare Part A and Part B because the benefits and administration of the program are offered by private insurance carriers, as compared to Part A and Part B which are administered by Medicare. Medicare regulates and provides financial support to the Medicare Part D carriers on a one-year, annually renewable contract.
Medicare Part D coverage will include a monthly premium which varies by carrier; an annual deductible, which can be waived by the carrier; prescription copayments, a reduced benefit structure during the coverage gap and heavily discounted prescriptions once the catastrophic condition has been met.
Stateside Insurance and Medicare Supplement Coverage
Stateside has been writing Medicare Supplement coverage since 2003 and written over 2,500 policies. Stateside provides various Medicare Supplement options three months in advance of an individual’s birth month. Stateside will provide coverage and premium information from eight different carriers and be available to discuss and explain various aspects of Medicare, Medicare Supplement coverage and the carriers that provide the coverage.
Stateside also contacts individuals and requests current prescription information in order identify the three (3) lowest cost carriers for Medicare Part D coverage. The lowest cost is determined by adding premium cost, deductible and out-of-pocket drug costs. Only then can the three (3) overall lowest cost providers be identified.
Stateside personnel are very familiar with Medicare, Medicare Supplement and Medicare Part D markets. Program and product knowledge have been gained by participating in the senior market for almost 20 years. Stateside would be glad to discuss in detail your Medicare enrollment, Medicare Supplement or Medicare Part D questions. Stateside will spend as much time as necessary to explain Medicare and share their experience from assisting thousands of Texas consumers. You can contact Stateside with questions at either (866) 444-3332 (toll free) or by email at firstname.lastname@example.org.
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.