Medicare Enrollment 101: A Guide for Financial Advisors to Help Clients Sign Up for Medicare
February 7, 2024
Individuals turning 65 have reached an important milestone: they can finally enroll in Medicare! Many have been eagerly anticipating the year they turn 65—especially those who have postponed retirement to avoid paying for expensive health insurance otherwise. And for those who have already retired, they’re likely looking forward to Medicare enrollment as well.
But before they can check Medicare enrollment off their “Turning 65 Checklist”, it's important that you know how to guide them through the process. Unfortunately, Medicare enrollment is not straightforward, and making mistakes during the Initial Enrollment Period can result in financial implications like costly penalties, gaps in coverage, and/or insufficient coverage.
Together, we’ll review the basic parts of Medicare, enrollment deadlines, how to enroll, and some common costs your clients can expect. With this guide in hand, you’ll be able to take your older clients through the Medicare enrollment process from start to finish with confidence.
What Are Clients Enrolling In?
Before diving into the timeframe specifics of Medicare enrollment, it’s important to first understand what your clients may enroll in. Many pre-retirees mistakenly think that all Medicare is the same, but in reality, they have many decisions to make about the Parts of Medicare they’ll enroll in. The main components of Medicare include:
- Part A (Hospital Insurance): Medicare Part A covers services like hospital inpatient care, hospice care, home health care, and some types of skilled, inpatient nursing home care (excluding long-term care).
- Part B (Medical Insurance): Medicare Part B covers preventive and medically necessary services that diagnose or treat medical conditions. Examples of these services include doctor's visits, some outpatient services, some mental health services, and prescribed durable medical equipment.
- Part C (Medicare Advantage): Medicare Advantage plans offer an alternative way of getting the same coverage found under Parts A and B (Original Medicare) plus additional coverage, including coverage for the 20% that Parts A and B don’t cover. Medicare Advantage Plans, which are often bundled with Part D, are provided by Medicare-approved private insurance companies. Individuals typically have dozens of Medicare Advantage Plans to choose from depending on the state they live in.
- Medicare Supplement (“Medigap”): Medigap supplements Parts A & B (whereas a Medicare Advantage plan offers an alternative way to get Parts A & B) by paying for some of the costs for covered healthcare services and supplies, including copayments, coinsurance, and deductibles. Some Medigap policies also offer additional coverage on services not covered by Parts A & B.
- Part D (Prescription Drug Coverage): Medicare Part D aids in covering the cost of prescription medications. This coverage is optional (penalties will apply if you delay coverage) but is available to anyone with Original Medicare (Parts A & B). Most Medicare Advantage Plans bundle in prescription drug coverage.
When Can Clients Enroll?
There are lots of key dates to consider for Medicare enrollment depending on the circumstances of each individual client.
Parts A and B Enrollment
Most individuals will be able to sign up for Parts A and B during their Initial Enrollment Period, which lasts for seven months. The Initial Enrollment Period begins three months before they turn 65 and ends three months after. So if your client has an August birthday (like me!) then their IEP is from May to November. When coverage begins depends on which month individuals enroll, but the earliest it can be is their birthday month and it will always start on the first of the month.
Signing up for Medicare during the Initial Enrollment Period is not optional for most people. If your clients miss the Initial Enrollment Period, they may have to wait to sign up until the next General Enrollment Period, which may result in a delay in coverage and a lifetime late enrollment penalty. The longer they wait to sign up, the higher the penalty.
Once individuals have enrolled, they can make changes to their Medicare coverage during the Open Enrollment Period, from October 15 to December 7 each year, or the General Enrollment Period, which happens annually between January 1st and March 31st, depending on their circumstances.
In limited special circumstances, some individuals can make changes to their coverage or enroll in Medicare for the first time outside of the Initial and General Enrollment Periods, but only if they’re eligible for what’s known as a Special Enrollment Period. These special circumstances may include changing addresses outside their plan’s service area, losing certain existing coverages, or being offered coverage changes by their employer.
Medigap, Medicare Advantage (Part C), and Part D Enrollment
Individuals will need to have enrolled in Parts A and B prior to signing up for a Medigap, Medicare Advantage, or Part D plan.
In most cases, you only have 60 days to enroll in these plans after you’ve enrolled in Parts A and B. Once you’ve selected either Medigap or Medicare Advantage, you have your entire first year as a Trial Right Period to possibly switch to the other if you’re not satisfied. After this time, you can only switch during limited times of the year and you may be subject to medical underwriting.
How Do Clients Start the Enrollment Process?
Now that we’ve covered what Parts of Medicare clients can enroll in and when they can enroll, let’s review how they sign up for Medicare. Thankfully, the process for signing up for Original Medicare is relatively simple. If your client is already receiving Social Security benefits, they may already be enrolled in Original Medicare.
Listed below are the various options available for individuals who are not currently receiving Social Security benefits:
- Apply Online: The easiest (and often fastest) way to sign up for Medicare is to sign up online on the Social Security website. They’ll need to create a secure Social Security account to get started. Note: If clients are already collecting Social Security, they will be automatically enrolled in Parts A and B.
- Call Social Security: They can also call Social Security at 1-800-772-1213 or 1-800-325-0778 if they’re using a teletypewriter. Individuals can also contact a local Social Security office in their area and reach out for assistance.
- Railroad Retirement Board: It’s worth noting that if your client or their spouse worked for a railroad, they have the option of reaching out to the Railroad Retirement Board. The Railroad Retirement Board can be reached at 1-877-772-5772.
Enrolling in a Medigap, Medicare Advantage Plan or a standalone Part D plan requires more effort. Because they likely have many plans available to them, this is a good opportunity to help your clients clarify their medical needs, research various plan options, and review potential costs.
Once this process is complete, they can enroll in a plan online, contact the plan holder directly, or call 1-800-633-4227 (1-877-486-2048 for teletypewriter users) for assistance.
What Costs Should Clients Anticipate?
When it comes to Part A coverage, most people don’t pay a premium, hence why it’s often known as premium-free Part A. Most people are eligible for premium-free Part A at age 65. Those who have paid Medicare taxes for a certain amount of time while working or anyone who is already receiving or will receive Social Security benefits or Railroad Retirement Board benefits qualifies for premium-free Part A.
If your clients do have to pay for Part A coverage, they may be looking at a premium between $274 and $499 each month in 2022. The number will depend on how long they (or their spouse) worked and paid into Medicare taxes. Additionally, they’ll be subject to a deductible of $1,556 as well as a potential range of coinsurance payments.
For Part B coverage, the standard premium for most individuals is $171.10 for 2022. However, some clients may pay a higher premium depending on their income. Additionally, they’ll be subject to a $233 deductible and may also pay 20% of the Medicare-Approved Amount for most outpatient therapy, durable medical equipment, and doctor services (including ones rendered as a hospital inpatient), unless they have a Medigap or Medicare Advantage plan.
Monthly premiums vary by plan for Medigap, Medicare Advantage, and Part D. You can help your clients compare plan costs here.
How to Offer Your Clients More Support With Medicare
At this time in their lives, your clients need to understand the basic tenets of Medicare, when they have to enroll, how they can sign up, and the costs of doing so. This is a very big transition for many, and Medicare comes with key differences from employer-sponsored or Marketplace insurance.
Although there are Medicare insurance agents who can help them, the commission-based nature of their services means that your clients may not always receive the best advice.
At Caribou, we understand that advisors are constantly looking for ways to help their clients plan for a more secure future. Medicare likely won’t be the only healthcare conversation you have with older clients. And the sooner you start having these conversations, the more prepared you will be to help clients handle the high costs of medical care in retirement. For more information about helping your clients successfully transition to Medicare, follow us on LinkedIn!