insurance

When to Sign Up for Medigap and Prescription-Drug Coverage

You can limit out-of-pocket medical costs left by the gaps in Medicare by shopping for medigap, prescription drug and Medicare Advantage policies. But timing is key.

Question: I read your column about the time frame for signing up for Medicare Part B if you’re still working past age 65. How long do you have to get Medicare supplement and Part D coverage or a Medicare Advantage plan?

Answer:

You can sign up for a Medicare supplement, or medigap, plan at any time. Medigap covers deductibles and co-payments and other expenses that Medicare doesn’t cover. But you’ll have the most options and may save money if you choose a plan within six months of signing up for Part B.

If you sign up for Medicare at age 65, you can also sign up for Part D, which covers outpatient prescription drugs, or Medicare Advantage, which provides medical and drug coverage, during the seven-month initial enrollment period, which includes the month you turn 65 as well as the three months before and after. You may have to pay a penalty if you don’t have drug coverage by certain deadlines (see below). If you’re one of the lucky few who have retiree coverage from a former employer, that may fill in the gaps.

MEDIGAP. If you don’t sign up for medigap insurance within six months of signing up for Medicare, you generally have to go through medical underwriting, meaning the health plan checks to see if you’ve been hospitalized in the past two years or if you’ve had any chronic health issues, says Shaina Popkin, an independent Medicare broker in Long Beach, Calif. And insurers in most states can charge you more or reject you for coverage because of preexisting conditions.

You could still qualify for a medigap policy if you’re healthy, and your state may have special rules allowing you to get a policy at certain times regardless of any preexisting conditions. In California, for example, you can buy any medigap policy with lesser benefits than your current plan within a 30-day period starting on your birthday each year, regardless of your health. Find out more from your state insurance department or by contacting the State Health Insurance Assistance Program in your area. Also see Medicare.gov’s When Can I Buy Medigap? to learn about other special situations when you can buy a policy regardless of preexisting conditions. See How to Save on Medicare Supplement Insurance for information about shopping for a policy.

PART D AND MEDICARE ADVANTAGE. If you delayed signing up for drug coverage because you were covered by an employer or other source, you have two months after losing that insurance to sign up for Part D or a Medicare Advantage plan. If you miss that deadline, you generally have to wait until the next open-enrollment period to sign up. Open enrollment runs from October 15 to December 7 for coverage starting January 1.

You’ll also have to pay a penalty if you go more than 63 days without “creditable drug coverage,” which can include drug coverage from an employer, a retiree plan, Tricare or a few other sources considered to be as good as or better than Medicare’s drug insurance. Ask your plan if it is eligible. The penalty is 1% of the “national base premium” ($35.63 in 2017) for every month that you didn’t have Part D or creditable coverage. See How to Avoid the Medicare Part D Penalty for more information.

You can switch Part D or Medicare Advantage plans every year during open enrollment. It’s a good idea to check out all of your options annually to see if your plan still offers the best deal for your drugs, doctors and other care. Go to the Medicare Plan Finder to compare premiums, coverage and out-of-pocket costs for all of the Part D and Medicare Advantage plans in your area.

There are also some special circumstances in which you can switch Part D or Medicare Advantage plans outside of open enrollment, such as if you move to a new address not in your plan’s service area. For more information, see Medicare.gov’s Special Circumstances page or the Medicare Rights Center’s Special Enrollment Periods guide. You can also switch into a Medicare Advantage plan with a five-star quality rating anytime during the year if one is available in your area. However, there are only 17 five-star plans in the country in 2017. See How to Switch Out of a Medicare Advantage Plan for more information.

For more information about choosing a medigap, Part D or Medicare Advantage plan, see How to Fill in Medicare Coverage Gaps. Also see FAQs About Medicare for information about the rules for signing up, as well as how to fill the gaps and save money on coverage.

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