By Guest Blogger, Ross Blair, CEO of PlanPrescriber
In part 1 of this blog I talked about the first three things you should keep in mind regarding employer coverage vs. Medicare if your 65 or older and continuing to work. I will now continue that discussion with two more things to keep in mind.
4. How do Part A and Part B work with COBRA? COBRA provides certain former employees and spouses the right to temporarily continue health coverage at group rates. However, it’s expensive, so people who qualify for Medicare often decline costly COBRA and switch to Medicare. But if your spouse is not 65 and therefore not eligible for Medicare, COBRA may be their best option.
Here is where it gets tricky. By law, a person can stay on COBRA for 18 months. But if you’re eligible for Medicare, you only have eight months to sign up for Part B after your employment, or employer-based health insurance, comes to an end. Even if you’re on COBRA.
If you are on COBRA, do not wait until your COBRA ends to enroll in Part B. If you do not enroll in Part B during that eight-month period, you will incur a 10 percent Part B premium penalty for every 12-month period that you were not enrolled. If you miss the first enrollment window, you will need to wait until Medicare’s Annual Enrollment Period (Oct. 15 through Dec. 7) to sign up for Part B. And your coverage will not begin until Jan. 1 of the following year.
5. If you want to supplement your Medicare coverage, know the deadlines. There are a couple ways to help fill the “cost-sharing” gaps in Original Medicare, including Medicare Advantage and Medicare Supplement plans.
People can enroll in Medicare Advantage (also called Medicare Part C plans) as an alternative to Original Medicare. These plans allow a person to receive their Part A and Part B benefits, as well as Part D in most cases, from a private insurance company through a single consolidated plan. While Medicare Advantage plans can and often do have some of the same cost-sharing (deductibles, copayments and coinsurance) associated with Original Medicare, they cap your out-of-pocket expenses at $6,700 or less, depending on the plan.
According to eHealth’s 2013 Medicare Advantage Plan Landscape Data Summary, the average Medicare Advantage plan costs $60 a month on top of what one pays for Original Medicare; and the average cap on out-of-pocket costs for 2013 is about $4,500. By comparison, Original Medicare has no such cap on out-of-pocket expenses.
Remember, you’ll typically be signed up for Part A automatically when you turn 65. When you stop working and lose your employer-based plan, you have eight months to enroll in Part B. And you have three months to sign up for a Medicare Advantage plan (Part C) after you’ve signed up for Medicare Part B.
Medicare Supplement plans (also called Medigap plans) are offered as a supplement to Original Medicare, not as an alternative like the Medicare Advantage plans. In most states a person can enroll in one of 10 standardized Medicare Supplements plans, which must all provide the same core benefits, regardless of which insurer offers them. Plans typically do not include a prescription drug benefit, but the most comprehensive Supplement plans often cover virtually all of a person’s Part A and Part B out-of-pocket costs.
According to an analysis of all the Medicare Supplement F plans available on PlanPrescriber.com in the fall of 2012, the average priced plan was $178 a month.
The Open Enrollment Period for Medigap policies (supplement insurance) starts the first month a beneficiary is both 65 and enrolled in Part B, and it lasts for six months. As long as you have coverage through your employer, you typically won’t need Part B or a Medicare Supplement plan. Once you sign up for Part B, you don’t want to miss the Medigap Open Enrollment Period.
Outside of your initial Medigap Open Enrollment Period, your application for a Medigap plan could be declined if you have a pre-existing condition. Or if your health condition is covered, your premium may be higher. Some Medigap plans may require you to pay premiums but wait a few months before they’ll cover any expenses.
For many baby boomers, becoming eligible for Medicare means access to more affordable health care. When you are working after age 65, you have more options. Taking the time to understand all your options will help you select the coverage that is best for you.
Ross Blair is President and CEO of PlanPrescriber, Inc. (www.PlanPrescriber.com), a leading provider of comparison tools and educational materials for Medicare-related insurance products.
The Centers for Medicare and Medicaid Services (CMS) has neither reviewed nor endorsed the information provided by PlanPrescriber.