Why you can’t afford to miss Medicare’s general enrollment

Even when you sign up, you won’t be covered until this summer.

  • By Alessandra Malito,
  • MarketWatch
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Seniors have less than two weeks to sign up for Medicare general enrollment, and missing this deadline could cost them.

General enrollment is for individuals who missed their first enrollment period, which starts three months before the month of their 65th birthday and ends three months after it. Even though Medicare sends plenty of mail, as well as a handbook, people miss the deadline, said Danielle Roberts, co-owner of Boomer Benefits, a company that helps older Americans with their Medicare insurance. Those signing up during general enrollment, which begins on Jan. 1 and ends on March 31 every year, are usually also at risk of paying a penalty for missing their first enrollment period.

Medical insurance is especially important for the elderly. Health care expenses rise dramatically year after year, especially as someone ages. Some people over 70 might see medical bills in the six-figures — 5% will have out-of-pocket expenses of more than $300,000, and 1% will see their bills exceed $600,000, according to The Lifetime Medical Spending of Retirees, a report the National Bureau of Economic Research distributed in July.

The risks of missing the enrollment period for Medicare can be dangerous and expensive. The general enrollment period may end on March 31, but those seniors’ coverage won’t begin until July 1 — and only for Medicare Part A and B, which cover hospital insurance and medical insurance, respectively. Americans can’t enroll for prescription coverage, which falls under Part D, until annual enrollment in the fall, and won’t be covered until the following January. That means some seniors could go months without health insurance, and an entire year without coverage for their medications, Roberts said. “There are a few every year in this situation. We tell them: no parachuting, no hand-gliding,” she said. “Be super careful — you will be at the mercy of whatever hospital will take you and you can incur significant bills if you have an emergency.”

Older Americans miss the deadline for a few reasons, and it often comes down to miscommunication or a lack of understanding. Many seniors assume they’re automatically enrolled in Medicare when they turn 65, but that’s only true of those already claiming Social Security benefits. Those 65 and older also think they don’t need to sign up for Medicare if they’re still working, but that depends on what company they work for — larger companies’ insurance plans may be primary to Medicare, but small businesses with less than 20 people have insurance that falls secondary to Medicare, which means they need to enroll when it becomes available to them.

Workers who have left their jobs or were laid off may also be covered temporarily under COBRA, and think that option is better than enrolling in Medicare — but it’s not, said Diane Omdahl, co-founder and president of Sixty-Five Incorporated, a Medicare consulting and resources firm. COBRA, which employees pay for, usually lasts for 18 months, and because it’s insurance workers are familiar with, they may think it’s best to stay with what they’ve got instead of switching to Medicare. The problem: if workers don’t switch to Medicare before COBRA is up, they might miss the deadline and have to wait for their new coverage to begin. “It’s a tough situation,” Omdahl said. COBRA is also more expensive than Medicare, as it could cost thousands of dollars for families as opposed to the standard premium of $135.50 a month for most Medicare enrollees.

But there’s yet another reason to stay ahead of Medicare enrollment deadlines: The penalty for missing certain deadlines can follow you around for the rest of your life.

The penalty for missing the initial enrollment period is 10% of their premium for every 12-month period without Medicare coverage, and it’s a permanent addition to their premium payments. It’s an additional 10% for every year missed, which means someone who retired at 72 from a small business and never enrolled in Medicare could owe a 70% penalty plus premium. There’s an additional penalty for drug coverage.

About 750,000 seniors paid a late-enrollment penalty in 2014, with an average 29% increase in monthly premiums, according to a 2016 Congressional Research Service report. Some Americans may be exempt from this penalty but must meet certain conditions.

Those who miss the deadline can sign up for short-term health insurance policies or inquire with insurance companies about coverage for emergencies, Roberts said. Younger spouses still working may also be able to claim them under their health insurance until Medicare is available. Seniors who need specific medications may be able to sign up for programs through the drug manufacturer, which will give them a deeply discounted price until they’re covered under Medicare. There are also resources available, like GoodRx.com and WellRx.com, where consumers can search for lowest-priced brand name or generic medications as well as coupons. To sign up for Medicare, understand what it covers and its costs or for more help, consumers can visit the Medicare website.

Medicare has been in the spotlight lately, especially as candidates begin announcing their presidential campaigns for 2020. One proposal is “Medicare for All,” an attempt to implement universal health care regardless of a person’s age or income level. But Medicare, as it currently stands, needs to be improved for its current beneficiaries, argue Elizabeth Kelly, senior vice president of United Income, and Tim Gronniger, president of Caravan Health and a United Income adviser. “Thanks to patchwork reforms over the last 50 years, America’s health insurance plan for seniors has grown needlessly complex,” they wrote. “Mistakes made during Medicare enrollment can also cause people to enroll in insufficient coverage and, occasionally, no coverage at all.”

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