What are Parts A, B, C and D of Medicare?
Part A: Covers hospital, skilled nursing facility, hospice and home health
Part B: Covers physician, outpatient, home health, durable medical equipment and preventive services
Part C: Optional enrollment in a private insurance plan which administers comprehensive Medicare benefits
Part D: Covers prescriptions drugs and is administered exclusively by private insurance plans
Initial Enrollment Period
You will be automatically enrolled in Parts A and B when you turn 65 if you are receiving Social Security benefits at that time. Otherwise, you will need to sign up on your own and, in any event, there is generally no automatic enrollment in Part D prescription drug coverage.
You may initially enroll in Medicare (A, B, D) during a 7-month period that begins 3 months before the month in which you turn 65, includes your birth month, and continues for 3 months after the month in which you turn 65. The earlier you sign up, the sooner your benefits will take effect. Generally there is no premium for Part A, however monthly premiums are charged for Parts B and D.
It is important to enroll timely. If you enroll late in Part B or Part D, you may be charged a penalty in the form of a higher monthly premium. Furthermore, if you delay enrolling you may be uninsured for a long period of time.
General Enrollment Period
If you do not enroll during the Initial Enrollment Period you may enroll during the General Enrollment Period from January 1 through March 31st. Benefits do not take effect until July 1st.
Special Enrollment Period
You may be entitled to a Special Enrollment Period if you are covered by a group health plan based on current employment. In that case, you will not be penalized for late enrollment if you sign up during the 8-month period beginning the month after coverage ends or employment ends, whichever happens first. You can also enroll any time while you are still covered by the group plan.
There is an array of other Special Enrollment Periods to address various changing circumstances, such as moving, losing creditable prescription drug coverage, failing to enroll timely due to the mistake of a federal employee, losing Extra Help with the Part D Drug benefit, and so forth. There is a Special Enrollment Period for a beneficiary who enters, resides in, or has just been discharged from an institution such as a skilled nursing facility or nursing home. For example, Medicare beneficiaries residing in nursing homes may drop coverage from a Medicare private insurance plan and return to the Original Medicare program at any time.
Penalty for Late Enrollment
If you enroll late in Part B or Part D and you are not entitled to a Special Enrollment Period, your monthly premium may be increased permanently. The penalty for enrolling late in Part B is an increase in the premium of 10% for each full 12-month period in which you could have had Part B but did not sign up.
If you enroll late in Part D and there is a period of at least 63 consecutive days in which you did not have creditable coverage, you may be penalized. The penalty is calculated by multiplying 1% of the “national base beneficiary premium” times the number of full months in which you lacked coverage and were eligible but did not enroll in a Medicare prescription drug plan. The final amount is rounded to the nearest $.10 and added to your monthly premium.
Medicare Supplement Plans (Medigap)
There is an initial Open Enrollment Period for enrolling in a Medicare Supplement or Medigap plan, which pays Medicare co-payments and co-insurance expenses. Beginning the first month you are 65 and enrolled in Part B and continuing for 6 months, you have a guaranteed right to purchase any Medicare Supplement plan regardless of health status.