Medicare Advantage can be a great choice for many seniors who qualify for Original Medicare, but the options and plan limits can be confusing for people enrolling for the first time. Adding a sense of urgency is that most plans have time restrictions and special requirements for joining without incurring a gap in coverage or a penalty rate for late sign ups. If you are about to choose a Medicare Advantage plan, it’s important to understand the process prior to enrollment.
One of the main questions seniors have on this issue is how and when they should enroll in a Medicare Advantage plan. The short answer is that you have a 7-month window centered on the month you turn 65 and become eligible for Medicare benefits. The clock for this starts ticking on the first day of the month three months before the month of your birthday, and it ends on the last day of the third month after your birth month. Thus, if you turn 65 on July 10, your enrollment period starts on April 1 of the year you become eligible for Medicare, and it ends on October 31 of the same year.
The purpose of this guide is to educate readers about the process of signing up for Medicare Advantage. Starting with an overview of the Original Medicare system, the guide goes over the options and time limits for enrolling in Medicare Advantage.
The Basics of Medicare
In order to understand the process of signing up for Medicare Advantage, it helps to first get to know the basics of Original Medicare, as well as the different parts most beneficiaries have to deal with. Medicare is split into several parts, each of which provides medical insurance for different services:
Medicare Part A
Medicare Part A is the basic coverage Medicare provides for its beneficiaries. This is a no-cost plan that covers the cost of inpatient hospitalization for eligible seniors. All U.S. citizens are automatically enrolled in Part A when they become eligible, since there is no out-of-pocket cost or monthly premium for this coverage. Services covered under Part A generally revolve around admissions to the hospital and treatments provided as part of regular inpatient care. Providers bill the Original Medicare program directly, which then pays for services according to a fixed or negotiated schedule. All Medicare-qualified providers are part of the Part A network, and they are required to bill only Medicare for covered services, unless the patient has a Medicare Advantage plan that provides the same coverage.
Medicare Part B
Part B coverage is similar to Medicare Part A but for services provided on an outpatient basis. This is the cost of doctors’ office visits and some specialist care. Unlike Part A, services provided under Part B may come with a share of cost or other expenses. Some Part B plans charge a monthly premium that averages $28 a month. Because this coverage costs most beneficiaries money, enrollment in the plan is not automatic the way it is for Part A. Medicare-eligible seniors have options for alternative coverage that is generally provided through a private insurance carrier.
Medicare Part D
Medicare Part D is a prescription drug benefit plan that helps cover most of the cost of beneficiaries’ medication. Part D coverage amounts and costs vary quite a lot between beneficiaries and geographic regions, so there is no uniform pricing for this plan. It is not uncommon for Part D coverage to be included under some seniors’ Part B plans if they have chosen a private insurer.
Medicare Part C
Part C is not technically a part of Original Medicare, but it refers to the kind of coverage seniors can buy for themselves on the private insurance marketplace. Part C plans always provide the minimum coverage beneficiaries get under Parts A and B, often with a few extras included that might not have been covered under Original Medicare. Examples of extra coverage include eyeglasses, durable medical appliances, and transportation costs. Some Part C plans also include a prescription drug benefit that matches Medicare Part D.
Medicare Advantage plans are Part C. Seniors who become eligible for Medicare can sign up for a Medicare Advantage plan through an approved provider in their state and get combined coverage for hospitalizations, office visits, prescription drugs, and the extra benefits they feel they need to cover specific medical needs, such as eye exams and physical therapy. Prices and coverage limits are as variable as the private marketplace can make them, and every plan has to be thoroughly researched before you commit to it since details can vary even within one insurance company’s offerings.
Medicare Supplement Plans
Medicare supplements are not strictly part of the Medicare system, but they are a consequence of it. Whether you have Original Medicare or Medicare Advantage, there could easily be some gaps in coverage that leave certain services out. Many seniors also face high copayments and extra out-of-pocket expenses for services not covered by their Part C plan. Medicare supplement plans plug these gaps with various coverage options. These are highly variable, and each plan has to be discussed with an insurance agent to make sure the coverage is adequate for your situation.
Medicaid is often used as a low-cost or free Medicare supplement. This is the federal low-income medical insurance plan that provides a basic level of care for people of all ages who otherwise may not be able to afford a private insurance plan. Strict income and asset limitations apply in every state, and some Medicaid plans seek to recover expenses from the estates of beneficiaries who have passed away. If you think you may qualify for Medicaid supplemental plan, be sure to discuss the details with a Medicaid intake worker in your state.
How to Enroll in Medicare Advantage
Medicare Advantage coverage is not automatic, and you have to sign up for any plan you want for your Part C provision. These plans are offered by private insurance carriers, just like any other insurance product, and the enrollment process is similar to buying any health coverage.
Your first option for enrolling in a Medicare Advantage plan is to go straight to the private company that provides it and sign up. This is a direct method that works very well if you already know which company you’re interested in and what plan you want to buy into. It can be difficult to compare coverage options this way, however, which is why many seniors look into buying their Medicare Advantage from a third-party marketplace.
Most states offer relatively simple online tools for comparing Medicare Advantage options that are available in the area. Because some plans are limited to certain cities or counties, you may have to enter details about your address to find a plan that can cover your needs. Online tools like this typically ask questions about the specific coverage you need, as well as prescriptions you are on that you want to have coverage for. This information is only gathered for the purpose of helping you find a plan that covers your needs.
By law, you cannot be refused Medicare Advantage coverage because of a preexisting condition or the state of your health overall. In 47 states, you may have to pay more for Medicare Advantage coverage depending on these factors, as well as unhealthy habits such as tobacco use, but in Massachusetts, Wisconsin and Minnesota the law requires all insurers to offer rates based solely on geographic area, and not on individual factors such as these.
When to Enroll in Medicare Advantage
Medicare Advantage providers group their customers into risk pools to help spread out the costs of providing medical care. As a result, companies encourage all participants to join up and pay their monthly premiums in a set time block to help create uniformity and predictability in the risk pool. Buying into a Medicare Advantage plan is possible outside of the enrollment periods given, but it often comes at a penalty in higher prices or limited coverage for many seniors who sign up late. This makes it extra important to know when you can enroll in your chosen plan without penalties.
The Initial Coverage Election Period (ICEP)
Most of the people who buy into a Medicare Advantage plan do so during the initial coverage election period (ICEP). This is the period that begins three months before your birth month and ends three months after it. While there is no cost penalty for signing up at any time during this period, it is highly desirable to sign up as early in the period as possible. This is because any plan with a Part D component takes approximately three months to kick in, which means you could see a temporary gap in your drug coverage if you sign up any time after your birthday. This gap could last as long as three months after the time you lose the coverage you had before switching to Medicare, so it’s helpful to start your research before the ICEP and get the forms submitted prior to the first day of the month you turn 65.
Medicare Advantage Annual Election Period
It is not at all uncommon for seniors who have just started receiving Medicare benefits to opt for Original Medicare at first, only to decide on a Medicare Advantage option later. If you time the switch for the annual election period, this can be done without incurring a penalty rate. The Medicare Advantage annual enrollment period begins each year on October 15, or the beginning of the fourth quarter for most insurance companies. The enrollment period ends on December 7, which gives the provider time to finalize the risk pool before the new year.
Medicare Advantage Special Enrollment Period
Sometimes circumstances force beneficiaries to enroll in Medicare Advantage outside of the normal enrollment periods. This can be tricky to do without incurring a penalty rate, but there are special circumstances you can invoke to justify an out-of-period enrollment. Examples of special circumstances include:
- Moving from one coverage area to another, forcing you to switch providers
- Loss of prior coverage, such as insurance provided by an employer when the employment ends (COBRA coverage is NOT considered coverage from employment for this purpose)
- Changes to your prior coverage that were outside of your control, such as a rate hike or reduction of benefits
- Release from a correctional institution
- Loss of coverage caused by a federal employee, such as when you have been given inaccurate advice or have been improperly encouraged to choose an option other than the coverage you need
