How To Avoid Problems With Medicare?


When I was a kid, color TV was new.  Those of my generation remember the big console TVs.  They were big, bulky and expensive pieces of furniture.  They were not disposable.  If your TV broke you got it fixed rather than just replace it.

My dad was fascinated by mechanical things.  I know that he did not know a vacuum tube from a capacitor.  Still, when the TV broke and the repairman had to come, dad hovered over him and agreed with everything he said.  The electrical engineer could have said that the gravity of Jupiter caused a vacuum tube to explode and dad would have believed him.

What I learned from watching that is that many people are more content to believe something that is made up rather than risk exposing their ignorance of a topic by asking questions.  This event taught me to ask questions if I do not understand something.  Don’t show your ignorance by blindly following information that is given to you by a total stranger.  A couple of weeks ago I was asked the question below.

I hope you find the question, and my answer helpful.

QUESTION

I am a few months from my 65th birthday. As I research Medicare options, I am wondering about scenarios down the road.

My wife has a part-time job but it possibly will become full-time in the next few years. In that case, she would get company insurance which could cover me. If I become covered on such a company plan, can I back out of my optional Medicare components (e.g. Part B, medigap, prescription, etc.) without a problem? And pick it up in the future when I need it again? Are there penalties, higher rates, loss of pre-existing condition protection, etc?

I understand that if I have company coverage when I turn 65 I can delay optional parts of Medicare without penalty. I just don’t know how it works if start off with add-ons, drop them and then add them again.

ANSWER

You are correct, there is no reason to pay twice for health insurance.  Just make sure you pay attention to what is going on.  Below are some additional questions that you need to ask when the time comes.

Which Plan Costs Less?

Most employers will not subsidize a spouse’s premium.  Your wife’s group plan will probably allow you to be covered but only at your expense.  You should see how much the group plan is going to cost before you drop your optional Medicare plans.

How Are Claims Paid?

You also need to verify how your wife’s group plan coordinates with Medicare.  Many group plans only act as secondary coverage (think Medigap) for people over 65.  That means that they will only pay what Medicare does not.  If that is the case you will need to keep your Medicare A & B options.

For example, if you have $10,000 of Medicare doctor bills, if your group plan is secondary to Medicare, it would only pay $2000.  If you keep your Medicare B, it will pay the other $8000.

Can I Reinstate My Medigap?

While you are guaranteed to be able to come and go with Medicare, you have no such guarantees with Medigap?  Medicare is an insurance program that is run by the federal government.  Medigap is administered by private insurance companies.  There are only a few times when your approval for Medigap is guaranteed.  When you first turn 65, you have a 6 month window, beginning on the 1st of the month in which you turn 65, to get guaranteed approval of Medigap.  This is called your Initial Enrollment Period

If you cancel your Medigap to join a group plan and later return to Medicare and Medigap, you do not get another Initial Enrollment Period.  You only have 63 days of guaranteed approval for Medigap in a Special Enrollment Period.

Would I Be Opening Myself Up For Penalties?

Medicare has penalties for both Medicare B and Medicare D for those people who could have participated in the plan but elected to put off participation.

When your wife eventually retires and you lose the group plan, the clock will start.  You will only have a small window of time in which to restore your Medicare options.  If you do not do so within that period of time, you will have to wait until Medicare’s next Enrollment Period to re-enroll.

While you are waiting, Medicare will assess a penalty for each month that you could have been in Medicare but was not.  If you are going to leave Medicare for group coverage, remember that it is up to you to re-enroll in your optional Medicare benefits in a timely manner.