Do You Know What Your Initial Enrollment Period Is For Medicare Supplement?

I just finished reading a newspaper “financial advise” article.  It bothered me.

I am not a financial guru.  I am not qualified to offer any advice on equities, bonds or debentures.

However, I have worked with insurance for 25 years.  I may not be able to help you accumulate money for retirement but I do understand strategies to help you  keep what you have been able to accumulate.

Assuming that your mortgage is paid off when you retire, the biggest expense that remains is health care.  Most Americans understand that when they turn 65, if they qualify, they can rely on Medicare for most of their health care needs.


However Medicare is not going to pay for all your health care expenses.  The most recent figure I have seen estimates that the average American will spend $240,000 on medically necessary health care during retirement.

As doctors and hospitals continue to raise their fees, I expect the next time I see that figure it to be over $250,000.  This figure does not include money that is spent on Long Term Care expenses, but that is a topic for a different post.

The $240,000 figure is a combination of both “in-patient” (Medicare A) and “out-patient” (Medicare B) expenses.  Those two parts of Medicare pay differently.


If you are a legal citizen of the United States and you or your spouse paid payroll taxes for at least 10 years, you are eligible for Medicare.  When you turn 65 you will not have to pay anything for Medicare A.

Medicare A will help with your hospital bill if you are admitted to the hospital for medically necessary reasons.  There are a few limitations to Medicare A.

  • Medicare A will pay 100% of your hospital bills after you have paid your annual deductible.  That deductible is not like the one you had previously.  The Medicare A deductible applies each time you enter the hospital rather than once a year.  The only time the deductible is waived is if you must re-enter the hospital within 60 days of being discharged for the same ailment.
  • Medicare A does not pay if your hospitalization is for “observation” or “precautionary.”
  • Medicare A does not pay your doctor’s bill.  It only pays the bills it receives from your hospital.


Medicare B is the part of Medicare that pays for your medical expenses that take place as an outpatient or are billed by your doctor.  It is an optional coverage for which you must pay a premium.  That premium is determined each year for the next year.

Medicare B has several limitations as well.

  • Medicare B is subject to an annual deductible.  That deductible is $147 for 2013.
  • Medicare B will only pay 80% of the “Medicare approved” fee for each medical procedure.  You are responsible to pay the extra 20% (co-insurance.)
  • If your doctor does not “participate” with Medicare, he can charge up to 15% above what Medicare approves for a treatment.  You will be responsible for that “Excess Fee” in addition to the 20% co-insurance.
  • Medicare B does not pay anything for medical treatment obtained outside of the borders of the United States or its territories.  If you want health insurance during your vacation to Europe, you will need to make other arrangements.


Medicare Supplement insurance is designed to pay some, or all, of the bills that Medicare A & B does not.  Although you will be able to buy a Medicare Supplement policy at any time, assuming that you can medically qualify, those who have pre-existing conditions or just do not want to fool with the limits of Medicare will need to act within their Initial Enrollment Period (IEP).

Insurance companies are required to issue Medicare Supplement policies without a per-existing condition limitation for people who apply for coverage, regardless of their health, during their IEP.

Your IEP will start 3 months before you are both 65 and apply for Medicare B.  It will end 3 months after you meet both criteria.  That means that you will have 7 months when you first start Medicare B in which you are guaranteed to be able to get a Medicare Supplement policy.

Medicare can be confusing.  Many people who are both 65 and enroll in Medicare B continue to be covered with group insurance.  When they finally retire and lose their group health insurance, they do not get another IEP.  They are eligible for a Special Election Period (SEP) for only 63 days.

If you apply for Medicare Supplement insurance during your SEP, the insurance company is required to issue you a policy regardless of any pre-existing conditions you may have.  However, if you delay and submit your application on the 64th day after you lose your group health insurance or later, you must be able to pass your insurance company’s medical underwriting.