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Turning 65? Time to figure out Medicare

Each day this year, approximately 10,000 baby boomers will become eligible for Medicare by turning 65. However, not all of them will sign up for Medicare — with the potential for positive or negative consequences, according to Allsup, a nationwide provider of Medicare plan selection services.

Individuals can enroll in Medicare plans in the three months before turning 65, the month they turn 65 and up to three months afterward.

“Turning 65 opens the door to Medicare eligibility, but it also raises some complex choices that can impact your entire family,” said Paula Muschler, manager of the Allsup Medicare Advisor, a personalized Medicare plan selection service that offers impartial, customized research and enrollment assistance.

This is especially true when individuals are first eligible for Medicare because they are unfamiliar with the program and their situations often are more complex. For example, they may need to coordinate Medicare with group health plan coverage, or they may have dependents who also need healthcare coverage.

“Your first year of Medicare eligibility is one of the most critical times because of the variety of choices you have to make and the potential for costly mistakes that may last your lifetime,” Muschler said.

Choosing Medicare plans is both a healthcare and a financial decision. Studies commissioned by Allsup find that the future of Medicare and healthcare-related costs topped retirement concerns. Yet just 44 percent of 64-year-olds have begun planning for Medicare enrollment. Medicare covers about 60 percent of healthcare costs in retirement, according to the Employee Benefits Research Institute.

Allsup offers a free brochure for seniors and their financial advisers called “Turning 65 and Medicare Enrollment.” Following are key steps:

1. Understand how existing group health plan coverage may coordinate with Medicare.

Many people work past age 65. As a result, Medicare-eligible individuals who have health coverage through their employer or their spouse’s employer may be able to keep that coverage and wait to enroll in Medicare Part B (doctor’s visits, outpatient care and other medical services). However, this option depends on other factors, such as the size of the employer and how soon they expect to retire after reaching 65. Seniors should check with their employer’s healthcare plan administrator to answer some of these questions.

2. Pay careful attention when first eligible and choose Medicare plans that match health needs and financial resources.

Individuals choosing traditional Medicare still have an average of 20 Medicare Part D prescription drug plans and 10 Medigap policies for supplemental coverage from which to choose. Adding to the importance of choosing wisely, Medigap plans are not required to accept someone after the person’s initial enrollment period. Those evaluating Medicare Advantage plans over traditional Medicare also have an array of options, with an average of 20 plans from which to choose.

3. Follow Medicare enrollment rules and avoid penalties.

Not following Medicare enrollment rules at the outset can cost participants for as long as they have Medicare. Those who delay enrollment improperly may have to pay a late-enrollment penalty of 10 percent for each full 12-month period they could have been enrolled in Part B. Likewise, Part D imposes a penalty if someone goes for more than 63 days without coverage after enrolling in Part B.

“Sometimes eligibility for Medicare is complicated by retirement dates, COBRA coverage or dependent coverage, which makes it even more critical to speak with a knowledgeable Medicare specialist,” Muschler said.

4. Understand how Medicare costs are affected by higher income.

Higher-income beneficiaries pay higher Part B and prescription drug premiums. The 2013 monthly Part B premium is $104.90 for couples with income of $170,000 or below ($85,000 for individuals). However, the premium increases to between $146.90 and $335.70 for those with incomes above these thresholds. Likewise, higher-income beneficiaries can expect to pay from $11.60 to $66.40 more each month in prescription drug premiums.

“Your income can change dramatically after you retire, so it’s important to understand how your premiums will be determined and seek to correct that if needed,” Muschler said.

For more information about reaching Medicare eligibility this year, call the Allsup Medicare Advisor at 1-866-521-7655. Visit Medicare.Allsup.com for an online presentation about the Allsup Medicare Advisor service.