Medicare can be complex.
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Let us simplify it for you.

Original Medicare is one of your Medicare health coverage choices. You’ll have Original Medicare unless you choose a Medicare Advantage Plan or other types of Medicare health plan.

Medicare is provided by the federal government for people over 65 years of age or older, people under 65 with certain disabilities, and people of any age with End-Stage Renal Disease (ESRD) (permanent kidney failure requiring dialysis or a kidney transplant).

There are 2 main ways to get your Medicare coverage: Original Medicare or a Medicare Advantage Plan. Medicare is broken into four parts: A, B, C, and D.

• Medicare Part A covers:
• hospital stays, skilled nursing facility care, inpatient care in hospital, hospice care and home health care.
  You get Part A benefits directly from the government.
  
  

• Medicare Part B covers:
• doctor visits, outpatient care , labs, some preventive services and durable medical equipment. You receive Part B benefits directly from the government.
  
  

• Medicare Part C (also known as Medicare Advantage) covers:
• all the benefits and services covered under Part A and Part B. Part C plans are Medicare-approved private insurance companies and usually includes added benefits like prescription coverage, dental, vision, transportation, gym membership, acupuncture, chiropractic, insulin, and wellness perks.
  
  

• Medicare Part D (Medicare prescription drug coverage) covers:
• prescription drugs both brand name and generic. Part D is offered by Medicare-approved private insurance companies. You can gain Part D coverage through a Medicare Advantage or enrolling in a Prescription Drug Plan that offers Part D coverage on its own. It may help lower your prescription drug costs and help protect against higher costs in the future.

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Some individuals will be automatically enrolled into Medicare when they turn 65. If you are receiving Social Security retirement or Railroad retirement benefits, you will be automatically enrolled in Original Medicare (Parts A and B) when you turn 65.

If you have ALS (amyotrophic lateral sclerosis, also called Lou Gehrig’s disease), you’ll get Part A and Part B automatically the month your Social Security disability benefits begin.

If you weren’t automatically enrolled, you can sign up for Medicare:

• Online at https://secure.ssa.gov/iClaim/rib
• By calling Social Security at 1-800-772-1213 | TTY users can call 1-800-325-0778
• In-person at your local Social Security office

Once you enroll, you will receive your red, white and blue Medicare ID card in the mail. If you have not received your card, please contact your local Social Security office.

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If you are 65 and receiving Social Security retirement or Railroad Retirement benefits you will automatically be enrolled in Original Medicare (Parts A and B). Once you enroll, you will receive your red, white and blue Medicare ID card in the mail. If you have not received your card, please contact your local Social Security office.

If you didn’t get automatically enrolled in premium-free Part A (for example, because you’re still working and not yet getting Social Security or Railroad Retirement Board (RRB) benefits), you can sign up for a premium-free Part A (if you are eligible) any time during or after your Initial Enrollment Period begins.

If you’re eligible for premium-free Part A, you can enroll in Part A anytime after you’re first eligible for Medicare. Your Part A coverage will go back (retroactively) 6 months from when you sign up, but no earlier than the first month you’re eligible for Medicare. You can only sign up for Part B during one of the periods listed below.

Initial Enrollment Period
If you’re 65 and are not automatically enrolled, you can sign up during your Initial Enrollment Period (IEP). The IEP begins three months before your 65th birthday, lasts the entire month of your birthday and then continues for three months after your birthday. This means you have 7 months to enroll for the first time into Medicare. For any questions on your Medicare eligibility, please visit medicare.gov.

General Enrollment Period
If you didn’t sign up for Part A and/or Part B (for which you must pay premiums) when you were first eligible, you can sign up between January 1–March 31 each year. Your coverage will begin July 1 of that year. You may have to pay a higher Part A and/or Part B premium for late enrollment.

Special Enrollment Period
After your Initial Enrollment Period is over, you may have a chance to sign up for Medicare during a Special Enrollment Period. If you didn’t sign up for Part B (or Part A if you have to buy it) when you were first eligible because you have group health plan coverage based on current employment (your own, a spouse’s, or a family member’s-if you have a disability), you can sign up for Part A and/or Part B:

• Anytime you’re still covered by the group health plan
  
  
• During the 8-month period that begins the month after the employment ends or the coverage ends, whichever happens first
  
  
• Important: COBRA coverage and retiree health plans aren’t considered coverage based on current employment. You’re not eligible for a Special Enrollment Period when that coverage ends. To avoid paying a higher premium, make sure you sign up for Medicare when you’re first eligible.

Usually, you don’t pay a late enrollment penalty if you sign up during a Special Enrollment Period. This period doesn’t apply if you’re eligible for Medicare based on End-Stage Renal Disease (ESRD), or you’re still in your Initial Enrollment Period.

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A Medicare Advantage Plan is another way to get your Medicare Part A and Part B coverage. Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by Medicare-approved private companies that must follow rules set by Medicare. Most Medicare Advantage Plans include drug coverage (Part D). In many cases, you’ll need to use health care providers who participate in the plan’s network and service area for the lowest costs. These plans set a limit on what you’ll have to pay out-of-pocket each year for covered services, to help protect you from unexpected costs. Some plans offer out-of-network coverage, but sometimes at a higher cost. Remember, you must use the card from your Medicare Advantage Plan to get your Medicare-covered services. Keep your red, white, and blue Medicare card in a safe place because you’ll need it if you ever switch back to Original Medicare.

If you join a Medicare Advantage Plan, you’ll still have Medicare, but you’ll get most of your Part A and Part B coverage from your Medicare Advantage Plan, not Original Medicare.

The following are types of Medicare Advantage plans that may be available in your location:

• Health Maintenance Organization (HMO) plans: These plans offer a network of doctors and hospitals that members are generally required to use to be covered. Because of this, HMOs tend to have strict guidelines, meaning that any visits and prescriptions are subject to the plan approval. If you use providers outside of the plan network, you may need to pay the full cost out of pocket (with the exception of emergency or urgent care). You generally need to get a referral from your primary care doctor to see a specialist.
  
  
• Preferred Provider Organization (PPO) plans: Medicare Advantage PPO plans offer a network of doctors and hospitals for beneficiaries to choose from. Unlike an HMO, you have the option to receive care from health-care providers outside of the plan’s network, but you’ll pay higher out-of-pocket costs. Medicare Advantage PPOs don’t require you to have a primary care doctor, and you don’t need referrals for specialist care.
  
  
• Private Fee-for-Service (PFFS) plans: This type of plan allows visits to any Medicare-approved doctor or hospital, as long as the plan’s terms and conditions of payment are accepted by the provider. Keep in mind that you’ll need to find providers that contract with the plan each time you are receiving treatment.
  
  
• Special Needs Plans (SNPs): These plans limit enrollment to beneficiaries who have certain chronic conditions, are institutionalized, or qualify for both Medicare and state Medicaid (also known as dual eligibles). Benefits, provider options, and prescription drugs are tailored to meet the needs of the plan’s enrollees.
  
  
• Medicare Medical Savings Account (MSA) plans: These plans combine a high-deductible Medicare Advantage plan with a medical savings account. Every year, your MSA plan deposits money into a savings account that you can use to pay for medical expenses before you’ve reached the deductible. After your reach the deductible, your plan will begin to pay for Medicare-covered services. These plans don’t cover prescription drugs; if you want Medicare Part D coverage, you may enroll in a stand-alone Medicare Prescription Drug Plan.

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To enroll in a Medicare Advantage (Part C) plan, you must:

• Currently have Medicare Parts A and B
• Live in a service area where the Medicare Advantage plan is available

Other factors may include pre-existing conditions and End-Stage Renal Disease. For example, if you’re enrolling in a Special Needs Plan that targets beneficiaries with end-stage renal disease, you may be eligible to enroll in this type of Medicare Advantage plan. To learn more about other situations where you may be eligible for Medicare Part C if you have end-stage renal disease, you can contact Sift to speak with a licensed insurance agent and get your questions answered. You can also contact Medicare at 1-800-MEDICARE (1-800-633-4227); 24 hours a day, seven days a week. TTY users should call 1-877-486-2048.

Those with other health insurance coverage (a union or employer-sponsored health plan, for example) should get more information about their existing coverage before enrolling in a Medicare Advantage plan. It is possible you could lose your existing coverage once you enroll in a Medicare Advantage plan. Furthermore, if you discontinue the other plan for Medicare Part C coverage, you may not be able to reinstate your original coverage if you change your mind. It is generally a good idea to check with your current benefits administrator before you enroll in another health-care plan.

If you’d like to learn more about Medicare Advantage plan options or if you’d like help finding coverage that may fit your needs, contact one of Sift’s local licensed insurance agents today.

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Each year, you can choose to leave Medicare or Medicare Advantage Plan or make changes to the services they cover and what you pay. If the plan decides to stop participating in Medicare, you’ll have to join another Medicare Advantage Plan or return to Original Medicare.
Medicare Advantage Plans must follow certain rules when giving you information about how to join their plan.

Enrollment is available during your Initial Coverage Election Period (ICEP). This is the period in which individuals who are newly eligible for Medicare are eligible to enroll in a Medicare Advantage plan. For many people, the ICEP occurs at the same time as the Initial Enrollment Period (IEP), which begins three months before your 65th birthday and ends three months after your 65th birthday (seven months total). For example, if your birthday is July 5, your IEP is from April to October. If you enroll in Part A and Part B during your IEP, then your ICEP is the same 7-month duration as your IEP, from April to October. If you delay your enrollment in Part B due to the fact that you already have health coverage, (through an employer’s plan), your ICEP will not begin until you’re enrolled in Part B.

Other enrollment periods for a Medicare Advantage plan:

• Annual Enrollment Period (AEP): Is from October 15th to December 7th. During this time period, you can change plans or enroll in Medicare Advantage for the first time. If you decide to change Medicare plans, the new plan will be effective on January 1st of the upcoming year.
  
  
• Special Enrollment Period (SEP): If you have experienced specific life events or changes occur, you are able to make a one-time change during the year. Qualifying life events include, losing employer-covered insurance, retirement, or moving out of your plan’s service area.
  
  
• Open Enrollment Period (OEP): If you’re currently enrolled in a Medicare Advantage plan, you have the option to change plans once beginning January 1st through March 31st.
  
  
• During this period, you can’t:
  
• Switch from Original Medicare to a Medicare Advantage Plan
• Join a Medicare Drug Plan if you’re in Original Medicare
• Switch from one Medicare drug plan to another if you’re in Original Medicare.

You can only make one change during this period, and any changes you make will be effective the first of the month after the plan gets your request. If you’re returning to Original Medicare and joining a drug plan, you don’t need to contact your Medicare Advantage Plan to disenroll. The disenrollment will happen automatically when you join the drug plan.

For additional questions on your eligibility for Medicare Advantage, visit medicare.gov.

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If you did not enroll in Original Medicare during your Initial Enrollment Period, you have the opportunity to enroll during the following enrollment periods:

• Special Enrollment Period (SEP): If you wait to enroll in Part B because you or your spouse are working and have coverage through an employer, you can enroll during an SEP. Your SEP is either the 8-month period that begins the month after your employer coverage ends, or when the employment ends (whichever comes first).
  
  
• Tip: Many individuals sign up for Part A, which covers hospital costs, as soon as they become eligible for Medicare, because there is generally no premium for that coverage, whereas there is a premium associated with Part B.
  
  
• General Enrollment Period (GEP): If you don’t qualify for a Special Enrollment Period, you have to wait until the GEP (from January 1 to March 31) to enroll in Medicare Part A and/or Part B.

Keep in mind that you may have to pay a late enrollment penalty for Medicare Part A and/or Part B if you did not sign up during your Initial Enrollment Period.

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If you do not sign up for Medicare Part A and/or B within the required timeframe, you may have to pay late enrollment penalties.

Why does this happen? Simple answer: Medicare doesn’t want you to delay your enrollment. Think about it: If only individuals who needed insurance signed up when they were first eligible (during their IEP) and individuals that were healthy waited to sign up, then the premiums paid by the healthy individuals wouldn’t be enough to offset the costs of those who needed the insurance in the first place. Because of this, Medicare penalties are charged to those who postpone enrollment in a Medicare plan.

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After your IEP, if you go without any of the following for 63 days or more without prescription drug coverage, you may incur a penalty. Make sure you are enrolled in one of the following during your IEP:

• Stand-alone Prescription Drug Plan (PDP)
• Medicare Advantage Prescription Drug Plan (MA-PD)
• Other creditable prescription drug coverage*

*Prescription drug coverage that’s generally as good as or better than the basic Part D prescription drug coverage (for example, from an employer or the Department of Veteran Affairs).

What’s the Medicare drug coverage (Part D) late enrollment penalty?

The late enrollment penalty is an amount that’s permanently added to your Medicare drug coverage (Part D) premium. You may owe a late enrollment penalty if at any time after your Initial Enrollment Period is over, there’s a period of 63 or more days in a row when you don’t have Medicare drug coverage or other creditable prescription drug coverage. You’ll generally have to pay the penalty for as long as you have Medicare drug coverage.
Note: If you get Extra Help, you don’t pay a late enrollment penalty.

3 ways to avoid paying a penalty:

1. Enroll in Medicare drug coverage when you’re first eligible. Even if you don’t take drugs now, you should consider joining a Medicare drug plan or a Medicare Advantage Plan with drug coverage to avoid a penalty. You may be able to find a plan that meets your needs with little to no monthly premiums.
   
   
2. Enroll in Medicare drug coverage if you lose other creditable coverage. Creditable prescription drug coverage could include drug coverage from a current or former employer or union, TRICARE, Indian Health Service, the Department of Veterans Affairs, or individual health insurance coverage. Your plan must tell you each year if your non-Medicare drug coverage is creditable coverage. If you go 63 days or more in a row without Medicare drug coverage or other creditable prescription drug coverage, you may have to pay a penalty if you sign up for Medicare drug coverage later.
   
   
3. Keep records showing when you had other creditable drug coverage, and tell your plan when they ask about it. If you don’t tell your Medicare plan about your previous creditable prescription drug coverage, you may have to pay a penalty for as long as you have Medicare drug coverage.

How much more will I pay for a late enrollment penalty?

The cost of the late enrollment penalty depends on how long you didn’t have creditable prescription drug coverage. Currently, the late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($32.74 in 2020) by the number of full, uncovered months that you were eligible but didn’t enroll in Medicare drug coverage and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium. Since the “national base beneficiary premium” may increase each year, the penalty amount may also increase each year. After you enroll in Medicare drug coverage, the plan will tell you if you owe a penalty and what your premium will be. Visit Medicare.gov later this fall to find out how much the 2021 “national base beneficiary premium” will be.

Example:
Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment Period ended on May 31, 2016. She didn’t join Medicare drug coverage by May 31, 2016 and didn’t have other creditable prescription drug coverage. Mrs. Martinez joined a Medicare drug plan during the Annual Enrollment Period that ended December 7, 2018. Her Medicare drug coverage was effective January 1, 2019.

2019
Since Mrs. Martinez didn’t have Medicare drug coverage and was without creditable prescription drug coverage from June 2016–December 2018, her penalty in 2019 was 31% (1% for each of the 31 months) of $33.19 (the national base beneficiary premium for 2019), or $10.29. Since the monthly penalty is always rounded to the nearest $0.10, she paid $10.30 each month in addition to her plan’s monthly premium.

Here’s the math:
.31 (31% penalty) × $33.19 (2019 base beneficiary premium) = $10.29
$10.29 rounded to the nearest $0.10 = $10.30 (Mrs. Martinez’s monthly late enrollment penalty for 2019)
$33.19 + $10.30 = $43.49 The total amount Mrs. Martinez will pay for the premium and late enrollment penalty for 2019 is $43.49.

2020
In 2020, Medicare recalculated Mrs. Martinez’s penalty using the 2020 base beneficiary premium ($32.74). So, Mrs. Martinez’s new monthly penalty in 2020 is 31% of $32.74, or $10.15 each month. Since the monthly penalty is always rounded to the nearest $0.10, she pays $10.20 each month in addition to her plan’s monthly premium.

Here’s the math:
.31 (31% penalty) × $32.74 (2020 base beneficiary premium) = $10.15
$10.15 rounded to the nearest $0.10 = $10.20 (Mrs. Martinez’s monthly late enrollment penalty for 2020)
$32.74 + $10.20 = $42.94 The total amount Mrs. Martinez will pay for the premium and late enrollment penalty for 2020 is $42.94.

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If you didn’t get Part B when you’re first eligible, your monthly premium may go up 10% for each 12-month period you could’ve had Part B, but didn’t sign up. In most cases, you’ll have to pay this penalty each time you pay your premiums, for as long as you have Part B. And, the penalty increases the longer you go without Part B coverage.

Usually, you don’t pay a late enrollment penalty if you meet certain conditions that allow you to sign up for Part B during a Special Enrollment Period. Read more about different situations that may affect when you decide to get Part B.

If you have limited income and resources, your state may help you pay for Part A, and/or Part B. You may also qualify for Extra Help to pay for your Medicare prescription drug coverage.

Example
Your Initial Enrollment Period ended December 2016. You waited to sign up for Part B until March 2019 during the General Enrollment Period. Your coverage starts July 1, 2019. Your Part B premium penalty is 20% of the standard premium, and you’ll have to pay this penalty for as long as you have Part B. (Even though you weren’t covered a total of 27 months, this included only 2 full 12-month periods.)

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