What you need to know if you’re turning 65
Medicare offers a variety of choices. You can choose a plan tailored to your health needs and your budget.
Parts A, B and D all have penalties for those who do not enroll in these plans when first eligible to do so.
Part A penalty:
Pay an extra 10% of the cost of your monthly premium for twice the number of years you could have had Part A, but did not enroll. For example, if you don’t enroll for 3 years, you pay the higher premium for 6 years.
Part B penalty:
Pay an extra 10% of the cost of your monthly premium for each year you could have had coverage, but did not enroll. You will pay this late enrollment penalty for as long as you have Part B coverage.
Part D penalty:
If you don’t join a Part D plan when you are first eligible you may have to pay an enrollment penalty that is added to your Part D premium. The late enrollment penalty is 1% of the national average premium for every month you were without Part D prescription drug coverage or other creditable prescription drug coverage following your initial enrollment period, or if you had a break in creditable prescription drug coverage of 63 or more consecutive days. Creditable prescription drug coverage (for example, from an employer or union) means that it is expected to pay, on average, as much as Medicare’s standard prescription drug coverage. You will pay this late enrollment penalty for as long as you have Part D coverage.
You must enroll in Medicare Part A and Part B (Part A for hospital care and Part B for doctors’ visits) when you turn 65, unless you are still working or have retiree health and prescription drug coverage provided by your employer.
You can choose to do this through Original Medicare and then add on a prescription drug (Part D) plan and a Medigap/supplement plan as needed. Or, you can enroll in a Medicare Advantage Plan, which offers many services bundled into one plan.
- Is operated by the federal government. Original Medicare includes Part A (which covers hospital care) and Part B (which covers medical care, like doctor visits, lab tests and medical equipment). For details on premiums and deductibles, visit Medicare.gov.
- Does not cover prescription medications, so you also will need to enroll in a Medicare Part D prescription drug plan (PDP). Part D plans are operated by private companies approved by Medicare to offer a Medicare prescription drug plan. Even though you may not take any prescription drugs now, you may need to down the road and should enroll in a plan when you are first eligible.
Medicare Advantage Plans:
- Also known as Medicare Part C or Medicare Health Plans, Medicare Advantage plans provide Part A and Part B — and oftentimes, Part D — all in one plan. Private companies that are approved by Medicare operate these plans.
- You can choose from a variety of plans that are like the choices you may have had through your employer-provided health benefits. Each option will have a monthly premium. Depending on the plan, there may also be a deductible and a copayment/coinsurance at the time of service.
- Some plans may also provide coverage for dental, vision and hearing services, which are not provided through Original Medicare or a Medigap plan.
- Unlike Original Medicare, Medicare Advantage plans do not cover hospice care.
Medigap/Medicare Supplemental Plans:
- Plans are offered by Medicare-approved private insurance companies that cover costs not paid by Original Medicare (such as deductibles, coinsurance and copayments). There are 10 supplemental plans that offer a variety of supplemental options and are labeled A, B, C, D, F, G, K, L, M, and N.
- Some Medigap plans also offer coverage for services that Original Medicare does not cover, such as medical care when you travel outside the U.S. They generally do not cover long-term care, vision, dental, hearing, or private nursing. You may already have employer or union coverage that covers costs Original Medicare does not. Review your policy to see if supplemental coverage is needed.
- Retired military service members receive supplemental coverage through TRICARE. Be sure to review TRICARE coverage before selecting a Medigap policy.
Which Route Is Right for You?
Each approach has its pros and cons, and the path you choose will depend largely on your health needs and your budget. Here are some tips that may help you.
Consider Original Medicare and a Stand-Alone Part D Plan if:
- You wish to have greater choice and access to a larger network of health providers and facilities (most do accept Medicare)
- You would like to have greater choice in selecting a Part D plan that better suits your prescription medication needs
- You have supplemental coverage from an employer to cover some of the costs and services Medicare does not
- You require hospice care
- You do not mind coordinating coverage from multiple providers
Consider a Medicare Advantage Plan If You:
- Like the convenience of having all of your coverage through one provider
- Prefer a plan that is similar to what you may have had through an employer
- Want the ability to purchase a plan that covers services not available through Medicare, such as vision, dental, and hearing
- Are willing to use in-network doctors and medical facilities like in an HMO or PPO
- Find a Medicare Advantage Plan that offers Part D coverage that fits your needs. You can purchase a stand-alone Medicare Part D plan if you choose a Medicare Advantage Plan that does not offer Part D coverage.
Consider a Medigap/Medicare Supplement Plan If You:
- Expect to have high-cost medical needs, such as surgery or hospitalizations. All Medigap plans will cover 100% of your Part A coinsurance and hospital costs that are not covered under Original Medicare.
- Need assistance with your Part B copayments or deductible because you see the doctor frequently, or use medical equipment or devices.
- Do not have supplemental coverage provided by an employer or the military.
- Travel frequently outside the U.S.
- Require hospice or skilled nursing facility care, as many Medigap plans offer 50% to 100% coverage of your costs after Medicare pays its share.