Sarah celebrated her 64th birthday in October of 2020, meaning she will be 65 this year and eligible for Medicare. Luckily, she is aware that she must enroll or face the consequences of delaying enrollment. She needs to remember to do so herself because the Social Security Administration doesn’t alert people as they near age 65 that they are eligible to enroll in Medicare Part B.
The BENES Act Left Out One Key Provision
Last year, as 2020 was coming to a close, Congress passed several key provisions of the Beneficiary Enrollment Notification and Eligibility Simplification (BENES) Act (S. 1280/H.R. 2477) as part of a comprehensive legislative package. Signed into law days later, these policies updated Medicare enrollment rules for the first time in over 50 years!
The BENES Act policies modernize Medicare enrollment in several important ways:
- Ends lengthy waits for coverage: The bill eliminates the up to seven month-long wait for coverage that people can experience when they sign up for Medicare during the General Enrollment Period or in the later months of their Initial Enrollment Period. Beginning in 2023, Medicare coverage will begin the month after enrollment.
- Reduces barriers to care: It expands Medicare’s authority to grant a Special Enrollment Period for “exceptional circumstances.” In 2023, this critical tool will be available to facilitate enrollments program-wide, enhancing beneficiary access and administrative consistency.
- Aligns enrollment periods: To further maximize coverage continuity and ease transitions to Medicare, the bill directs the U.S. Department of Health and Human Services (HHS) to identify ways to align Medicare’s annual enrollment periods. HHS is to present these findings in a report to Congress by January 1, 2023.
- Funds the federal government through the end of the current fiscal year, provides some COVID-19 relief, and renews important health care policies for three years. The extensions include funding for community-based organizations that provide outreach and enrollment to low-income Medicare beneficiaries, financial protections for people whose spouses are on Medicaid and in a nursing home or long-term care facility, and provides funding to Medicaid’s Money Follows the Person program, which supports individuals who wish to leave nursing facilities and return to their homes.
A Major Provision Was Left Out
A little-noticed section of the BENES Act would have required the Social Security Administration to alert people nearing age 65 about their eligibility to enroll in Medicare, and the potential stiff costs and other risks if they fail to do so. Unfortunately, this part of the BENES Act was left out of the final legislation. So, the Social Security Administration is not required to inform people as they near age 65 that they are eligible to enroll in Medicare Part B—and to explain the consequences of mistakenly delaying enrollment.
When Should You Enroll in Medicare?
Currently, Medicare has three enrollment periods:
- The Initial Enrollment Period (IEP) includes the three months before you turn 65, the month of your 65th birthday, and the three months after you turn 65 or become eligible for Medicare due to receiving Social Security disability benefits. Coverage begins one to three months later, depending on when you enroll.
- For people transitioning from employer coverage at a later age, a Special Enrollment Period (SEP) is available for eight months after other insurance ends, and coverage begins the first month after you enroll.
- If you miss either of those enrollment opportunities, you must wait for a General Enrollment Period (GEP) that runs from January 1 to March 31 each year; Medicare coverage under Part B, and in some cases Part A, does not begin until July 1.
Under the new law, coverage will begin the month after enrollment, starting in 2023. That is an extremely important improvement. Be sure to enroll during one of these periods if you are turning 65, to avoid potentially steep penalties!
Penalties for Not Enrolling at the Right Time
If you already receive Social Security benefits at age 65, Medicare enrollment is automatic. For everyone else, you need to be vigilant and proactive. Here’s why:
Failure to enroll at age 65 can mean stiff late-enrollment surcharges equal to 10% of the standard Part B premium for each 12 months of delay—a penalty that continues for the rest of your life. The penalties can add up over the years as base premiums rise. For married couples, the penalties can DOUBLE if both spouses fail to enroll on time!
Medicare’s prescription drug program (Part D) comes with a much less onerous late-enrollment penalty, equal to 1% of the national base beneficiary premium for each month of delay.
If You Are Still Working…
As you can see, it’s important to enroll during the Initial Enrollment Period to avoid the late penalties. There is a major exception though — if you are still actively employed and covered by employer insurance. If this is your situation, when your active employment stops, there’s a Special Enrollment Period that allows delayed enrollment without incurring the late penalties, as described above. A spouse covered on a worker’s policy can do the same.
However, if you are anyone working for a firm with 20 or fewer employees, Medicare becomes the primary payer. In those cases, enrollment must occur at the first point of eligibility to avoid gaps in coverage and high out-of-pocket costs.
If you enrolled in a policy through the Affordable Care Act, you still need to move to Medicare at age 65.
Other Alerts Have Been Cut Back Too
You may have noticed that Social Security no longer mails out annual statements to all workers. The mailings have been cut back over the years to save money on printing and postage. Currently, the only people receiving paper statements by mail are those who are over age 60, have not claimed benefits, and do not have an online account. Currently, the only way to access the statement is by signing up for an online account at the Social Security website.
When it comes to alerts from Medicare, advocates say they will try again in future legislation. For now, be sure to pay attention to Medicare enrollment as you are nearing 65 years old!
Medicare Doesn’t Cover Nursing Homes – Now is Also the Time to Plan for Long-Term Care
Just as it is important to sign up for Medicare on time, it is also important to plan for long-term care. More than two-thirds of us will need some sort of long-term care in the future, but Medicare will NOT cover the costs.
Medicare Part A provides coverage for short-term stays in skilled nursing facilities, but only for rehabilitation for people who continue to improve, or for those who need skilled nursing care such as assistance with complex wound dressings, tube feedings, or rapidly changing health status. If you only require custodial care, such as help with bathing, dressing, and eating, that is considered long-term care and not healthcare, and is not covered by Medicare.
If you or a loved one is nearing the need for long-term care or already receiving long-term care, please call us to make an appointment for an initial consultation:
About Evan H Farr, CELA, CAP
