As we get older, health issues can be frustrating. It’s common sense that we’ll all face more health issues as we approach retirement age. As health issues increase, so does the importance of proper health insurance coverage. Use these tips to avoid problems with Medicare enrollment.
Medicare is funded through payroll taxes that are withheld from payroll. Those taxes are put into a trust fund at the US Treasury. Medicare provides health insurance for the elderly. The program pays for services (lab tests, surgeries, doctor visits) and supplies (such as wheelchairs and walkers). Here are the major components of Medicare:
- Part A of Medicare covers hospital care, skilled nursing care, nursing home care and home health services.
- Part B pays for many preventive services to prevent illness- like flu shots. Part B also pays for ambulance services, certain mental health coverage, and getting a second opinion before a surgery.
- Part D: Coverage for prescription drugs
Click here for Live Webinar: How To Manage Investment Costs and Risks: Mutual Funds and ETFs
Tricky issues with enrollment
If a person does not properly follow the Medicare enrollment guidelines, two problems can occur. First, the individual may experience a gap in health insurance coverage. Second, the insured person may pay a late enrollment penalty for Medicare Part B.
Medicare has an Initial Enrollment Period (IEP), a Special Enrollment Period (SEP) and a General Enrollment Period (GEP). Ideally, a person should enroll for Part A during the IEP to avoid problems.
Using the IEP
The IEP is based on the month when the person turns 65. However, individuals need to carefully follow the IEP guidelines to decide when to enroll and avoid a gap in coverage. This article provides a great chart that explains when to enroll and when Medicare gaps can occur.
The article also points out that, if you’re not receiving social security benefits at age 65, you will not be informed about the Medicare rules for IEP.
Employment and dealing with Part B
When you leave an employment-related health plan, you enroll in Medicare using SEP. The key word here is employment. If you’re a retiree, or on COBRA coverage, Medicare does not consider you as employed. That means that you should enroll using IEP- not the SEP method.
To avoid confusion, everyone should enroll in Medicare Part A during his or her IEP period. At that time, you can decide to delay enrolling in Part B, due to employment coverage. Fortunately, Part A typically does not require the insured to pay premiums.
Find an expert, get peace of mind
When you approach age 65, consult with a professional to get help with your Medicare enrollment process. They can help you get your coverage in place, and avoid gaps in coverage or financial penalties. A professional can help you have peace of mind.
Have you talked with someone who had trouble with Medicare enrollment? I’d love to hear from you.
St. Louis Test Preparation
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
Image: Dr. Farouk, stethoscope (CC By 2.0)