Series for seniors: Part 2 – Medicare parts and when to apply

by:  Joseph Doratan, MBA, CFP

The Original Medicare has Part A and Part B.  Part A covers inpatient services like hospitalization. Part B covers outpatient services. In 2006, prescription drug coverage (Part D) was added to the program.

Because even if a person who already has Parts A and B still has to shoulder roughly 20% cost-sharing, he may need a Medicare Supplement plan (Medigap) from work or private insurance to defray these cost-sharing. As an alternative to Medigap, Part C (Medicare Advantage) was formalized in 1997. One can think of “C” abbreviating “Combo” as it provides all the services of Parts A and B, mitigates the cost-sharing, and can also bundle Part D and other benefits.

Not all 65 and older are eligible. The senior has to be in the U.S. for at least 5 years of continuous stay and with legal presence.

A senior may apply for Parts A and B 3 months before turning 65, up to 3 months after the birthday month, total of 7 months. The government may penalize him for not getting Part B or Part D as soon as he is first eligible to have them. A senior who still has affordable group health insurance may delay getting Part B up to 8 months after he lost his group health, still deemed first eligible and not penalized. However, the same senior only has 2 months after losing his group health to get his Part D to avoid penalty. To avoid confusion, penalty and insurance gap, the best advice would be to apply for the Part B in the last month with the group health and Part A, if not yet applied for when he turned 65. Then add Part D immediately as a stand-alone policy or as a bundled benefit of Part C.

Call 855-955-1800 for questions or go to a FREE seminar on related topic on Saturday, Aug 23, 2014 10am – 11:30am at the West Covina Library along 1601 W Covina Pkwy.