Medicare Enrollment Deadlines – What You Need to Know Now 

If you’re nearing age 65, there is one deadline that you don’t want to miss – Medicare enrollment. Even if you’re still working and approaching age 65, you should understand your options; otherwise, you could face stiff penalties. As you near age 65, you have a 7-month Initial Enrollment window, including three months before your 65th birthday, the month of your 65th birthday, and three months following your 65th birthday. If you’re already enrolled, Annual Open Enrollment runs from October 15 through December 7, 2024. During this time, you can join, switch, or drop a Medicare Advantage Plan or Medicare drug plan. 

If you missed your initial enrollment window, you may enroll in Medicare Parts A, B, and/or D during the annual General Enrollment Period that runs from Jan. 1 – March 31, 2025. If you enroll during General Enrollment, you may also join a Medicare Advantage plan. The Medicare Advantage Open Enrollment period also runs from Jan. 1 – March 31, 2025, when you may switch from your current Medicare Advantage plan to another or drop your Medicare Advantage plan and return to original Medicare. You may also join, change, or drop a Medicare Advantage plan if you experience a “qualifying life event”, such as moving or losing other health coverage. Lastly, there’s a 5-Star Special Enrollment period from Nov. 8 – Dec. 30, 2024. If a 5-star quality Medicare Advantage plan, drug plan, or Medicare Cost plan becomes available in your area during the year, you may switch from your current plan to the 5-star plan during this period. 

What is Medicare? 

Medicare is health insurance for people aged 65 and older, people who have been on Social Security disability for 24 months, and people with certain chronic medical conditions, such as end-stage renal disease or amyotrophic lateral sclerosis (ALS). You often hear about the different “parts” of Medicare: 

• Part A is hospital coverage 

• Part B is physician services 

• Part C is Medicare Advantage 

• Part D is prescription drug coverage 

Parts A and B (commonly referred to as Original Medicare or basic coverage) are what you must enroll in when you become eligible near the 7-month window around your 65th birthday. In addition to original Medicare, there are two additional Parts, C and D. Part C is optional supplemental coverage, and Part D is required prescription drug coverage. We discuss these additional parts later in this article. 

Which parts of Medicare are required to enroll in, and which are optional? 

If you miss the critical enrollment deadlines required for Parts A, B, and D, you could face permanent premium increases imposed when you eventually enroll. If you plan to work after age 65 and are covered under your employer’s group health plan, you can qualify for an exception and delay your enrollment until you’re no longer working for that employer. Keep in mind that retiree coverage, COBRA, VA coverage, and individual health coverage (like those offered through the Health Insurance Marketplace) do not qualify for an exception for enrolling in Parts A and B, although VA drug coverage renders Part D enrollment optional. 

What do you pay? 

There are several ways Medicare costs are considered. If you’re working or have at least a 10-year work history, you don’t pay premiums for Part A since it’s funded entirely by payroll taxes. Medicare enrollees who don’t have enough work history to qualify may need to pay a Part A premium, but this is rare. Medicare Part A covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health care services. 

Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain medical and health services not covered by Medicare Part A. You must pay monthly premiums for Medicare Part B and meet certain annual deductibles. Medicare premiums, deductibles, and coinsurance rates are adjusted every year, according to the Social Security Act. The 2024 standard Medicare Part B premium amount is $174.70 and the annual deductible for all Medicare Part B beneficiaries is $240. After you meet this deductible for the year, you typically pay 20% of the Medicare-approved amount for most doctor services, outpatient therapy, and durable medical equipment. 

2024 Medicare Part B Monthly Premium Amounts 

	If your yearly income in 2022 (for what you pay in 2024) was
File individual tax return	$103,000 or less	above $103,000 up to $129,000	above $129,000 up to $161,000	above $161,000 up to $193,000	above $193,000 and less than $500,000	$500,000 or above
File joint tax return	$206,000 or less	above $206,000 up to $258,000	above $258,000 up to $322,000	above $322,000 up to $386,000	above $386,000 and less than $750,000	$750,000 or above
File married and separate tax return	$103,000 or less	not applicable	not applicable	not applicable	above $103,000 and less than $397,000	$397,000 or above
You pay each month (in 2024)	$174.70	$244.60	$349.40	$454.20	$559.00	$594.00

Source: “How Much Does Medicare Cost in 2024? Parts A, B, C and D.” Humana.  

As you see from the chart above, if your modified gross adjusted income reported on your tax return from two years ago is above a certain amount, you’ll pay the standard premium amount plus an Income Related Monthly Adjustment Amount (IRMAA) – essentially an extra charge on top of the standard premium. Medicare determines the IRMAA annually from a two-year lookback and notifies beneficiaries in January of each year. If you’re subject to required minimum distributions from your traditional individual retirement account (IRA) or an employer-sponsored retirement plan, you should take the IRMAA into consideration. As you can see, the Part B premium certainly deserves some attention since it may impact other financial decisions during retirement. Your wealth adviser can help you think through these implications. 

What does Part C (aka Medicare Advantage) cover? 

As mentioned, Medicare Parts A and B cover about 80% of your care costs, leaving you on the hook for the remaining 20%. Medicare Part C, also called Medicare Advantage, is an optional “all in one” alternative to original Medicare (Parts A and B) and includes Part D. Medicare Advantage effectively replaces Parts A and B with a single policy that covers hospital, physicians, supplemental, and drug costs. With few exceptions, you don’t shop for a separate drug plan when you buy into Medicare Advantage. All Medicare Advantage plans provide, at a minimum, the same benefits as Original Medicare, as well as additional benefits not offered through Medicare coverage. For example, many Medicare Advantage plans offer fitness memberships for no additional premium while some even throw in vision and hearing benefits. 

Medicare Part D 

Medicare Part D helps pay for prescription drugs. While this is optional, we highly encourage you to enroll in Medicare Part D when you’re first eligible. Otherwise, you’ll likely to pay a late enrollment penalty. You can add Medicare Part D to Parts A and B (Original Medicare) – you must have Medicare Part A and/or B to join a separate Medicare drug plan. You can also get Part D as part of Medicare Advantage. 

Like Medicare Part B, you pay a monthly premium for Part D, and many of its plans require an annual deductible. As noted above, if you receive your Part D coverage bundled in an Advantage Plan, there is no separate premium for drug coverage. We hate to mention IRMAA again, but you might also pay a higher Medicare Part D premium if your income is above a certain limit. The premiums and deductibles vary depending on the plan you choose. Each Part D plan has a “tiered formulary,” which is a list of drugs covered by the plan. Generic drugs are cheaper and have lower copays than brand-name drugs. No Part D plan covers all drugs. Every plan covers at least two drugs in each “therapeutic category,” so you should look through a prospective plan’s formulary to ensure your drugs are covered and how much they will cost under the plan. The medicare.gov website (www.medicare.gov) has a tool to help calculate your expected costs under each plan. Compare the costs for the generic prescriptions and look for plans that offer low or zero copays. 

What about Medigap? Think “Medicare Parts” and “Medigap Plans” 

As we mentioned, Original Medicare (Parts A and B) doesn’t fully cover your cost of medical care. It’s designed to cover about 80% of the costs, leaving you on the hook for the remaining 20%. This is where Medigap comes in – and where things can get complicated! 

If you elect to enroll in Medicare Parts A and B, you should also add “supplemental coverage” to defray your 20% out-of-pocket costs. Here you have two options: You can choose Medicare Advantage (Part C) or a Medigap plan – you can’t have both at the same time. Regardless of your choice, you must enroll and stay enrolled in both Parts A and B to own either supplement plan. If you’re fortunate to have retiree health insurance benefits from a prior employer, those benefits often provide excellent supplemental coverage. 

Medicare Advantage and Medigap offer different approaches to supplementing Original Medicare. While they are both purchased through private insurance companies, Medigap plans have strictly defined coverages labeled by their identifiers (Plan A through Plan N). Medicare periodically changes Medigap plans based on changing demands for health care, but all plans of similar label are identical, regardless of which insurance company provides the policy. This means you have identical coverage under plans of the same label (A-N), no matter which company you purchase it from because Medicare determines the coverage, not the insurance company. This is one of the few consumer products you can buy strictly based on cost and get the same benefits regardless of the provider. Remember, if you purchase a Medigap plan then you will also need to purchase a separate drug plan because Medigap plans may not include prescription drug coverage. 

So, how do you decide between a Medigap plan and Medicare Advantage for your supplemental coverage? This is a very personal decision and there’s no objective checklist to help you choose so it’s very important to do your homework before choosing. Here are some advantages and disadvantages for each option. 

Medigap Plans	Medicare Advantage (Medicare Part C)
Provides comprehensive coverage with little to no cost sharing beyond monthly premium and Part B deductible	Low or zero premiums
Clearly defined benefits regardless of plan identifier (Plans A-N)	Higher out-of-pocket costs (may be as high as $6,700 in some cases)
Insurance companies may not add benefits beyond Medicare’s strictly defined plan	Need to see doctors and other providers in the plan’s network and service area
Higher premiums than Medicare Advantage	Plans offer extra benefits not covered (like some vision, hearing, dental, routine exams and more)
See any doctor or hospital in the U.S. that takes Medicare

When assessing a Medigap supplement option, three 3Cs to consider are: cost, coverage, and consistency. People who consider themselves healthy, with little need for doctor visits and the ability to cover the out-of-pocket costs, might prefer Medicare Advantage and its low-premium structure. Those who have complicated care needs or prescription drug needs, might accept the higher premium without the cost-sharing. Some people also like to pay a single premium, even if it’s higher, and not worry about additional costs when they see their doctor. Again, we recommend you do your research before selecting. 

Keep in mind that, although you can switch from Medicare Advantage to Medigap, the change could entail medical qualification, called underwriting. There is no guaranteed issue of Medigap insurance after your initial enrollment window. Also, if you want to cancel your Medigap policy, contact your insurance company. In most cases, if you drop your Medigap policy to join a Medicare Advantage Plan, you won’t be able to get it back. It’s critical to do your homework before deciding on supplemental coverage! 

Do your research 

There are excellent free references for those who prefer to do their own research. Visit www.medicare.gov/ and download the free Medicare and You 2024 handbook which offers a detailed explanation about all things Medicare. You can also use the site to research medical and drug plans offered in your area and enroll in Medicare coverage. 

For more personal assistance, seek out insurance agents who provide Medicare Advantage plans. These individuals must pass an academic test every year to be certified through the Center for Medicare and Medicaid Services (CMS). CMS strictly regulates the distribution of Medicare Advantage and prescription drug plans, so agents in this field are well-versed to assist you. Your wealth adviser is also equipped to help if you desire objective advice from a fiduciary with no financial interest in your decision. Not a Mercer Advisors client but interested in more information? Let’s talk. 

Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. 

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