If you are turning 65 and enrolling in Medicare as a healthy senior, do you really need to sign up for Medicare’s supplemental coverage as well?
Not signing up initially could be very costly down the road.
With all the deductibles, copayments and coverage exclusions, basic Medicare pays for only about half of all medical costs.
To augment Medicare’s coverage, you can purchase a supplemental, or “Medigap,” insurance policy from a private insurer.
There are 10 Medigap plans, each identified by a different letter of the alphabet and each offering a different combination of benefits, allowing purchasers to choose the combinations that are right for them.
In addition, Medicare offers a federally subsidized prescription drug program in which private health insurers provide limited insurance coverage of prescription drugs to elderly and disabled Medicare recipients.
Purchasing the supplemental coverage means paying more in premiums. If you don’t go to the doctor very often or have any regular prescriptions, you may not want to sign up for the additional coverage. However, if you get sick, what Medicare doesn’t cover can be a lot more costly than the extra premiums, and buying coverage after you get sick can be difficult and expensive.
You cannot be denied a Medigap policy for pre-existing conditions if you apply within six months of enrolling in Medicare Part B. But if you don’t buy a policy within this time frame, the plan can use medical underwriting to decide whether to accept your application. The plan will look at your age, gender and pre-existing conditions, and it can charge you higher premiums, restrict coverage or even reject your application.
Beneficiaries who enroll in Medicare Advantage plans, which are Medicare’s version of managed care, can’t also buy Medigap policies. If they chose Medicare Advantage as their first form of insurance and later decide to return to original Medicare, they must select a Medigap policy within the first year of their initial Medicare enrollment or risk being shut out of a policy.
Medicare beneficiaries are also subject to significant financial penalties for late enrollment in the Medicare drug benefit (Medicare Part D).
For every month you delay enrollment past the Initial Enrollment Period, the Medicare Part D premium increases at least 1 percent.
For example, if the premium is $40 a month and you delay enrollment for 15 months, your premium penalty would be $6 (.04 x 15 = $6), meaning that you would pay $46 a month, not $40, for coverage that year, and an extra $6 a month each succeeding year.
There are some exceptions built in to both Medigap and Medicare Part D if you did not enroll right away because you had other coverage.
But if you choose not to enroll because you think you won’t need the plan, it is not easy to change your mind later on.