What to Do for Health Insurance While You're Waiting on Medicare

Posted by on in Life Transitions

Medicare is a federal health insurance program for adults 65 and older, and for some younger Americans who have a qualifying disability. The program was originally designed to take over for health insurance in retirement after employer coverage has ended, but has grown to be the go-to health plan for adults over 65.

How Medicare Works

Medicare is broken into four main services:

waiting on medicare coverage to start

Medicare Part A: This part covers hospital stays, stays in long-term health care facilities like nursing homes or hospice, and at-home care (in some situations).

Medicare Part B: This part works like regular health insurance, covering doctor visits, preventive services, and outpatient care.

Medicare Part D: This part offers prescription drug coverage.

Medicare Part C: This part works a little differently. Part C is a type of Medicare health plan that contracts Medicare Part A and Part B services to a private insurance company (some examples include Health Maintenance Organizations and Preferred Provider Organizations). These plans are also commonly referred to as Medicare Advantage Plans.

Medicare Signup Process

Enrollment takes place through the Social Security Administration. Because it is based on your birthday, signing up for Medicare works differently than buying insurance through an employer or the Marketplace.

According to eHealth, if you are turning 65 and already collecting Social Security or Railroad Retirement Benefits, or if you'll start collecting retirement at age 65, then initial enrollment in original Medicare, known as Part A and Part B, will occur automatically.

waiting on medicare coverage to start

If you don't qualify for automatic enrollment, you'll need to sign up for Part A and/or Part B during your Initial Enrollment Period (IEP), which includes the 3 months before your 65th birthday, the month of your 65th birthday, and the 3 months after.

If you miss your enrollment window, you can sign up during the General Enrollment Period, which lasts from January 1st to March 31st each year. Keep in mind that you may have to pay a late enrollment penalty for Parts A and B.

The Medicare Coverage Gap

Medicare is a great, affordable healthcare option for Americans over 65, but what happens if you retire early or face a gap in coverage between signing up and your insurance kicking in?

According to eHealth, if you register:

  • One to three months before your 65th birthday, coverage typically begins on the first day of the month you turn 65
  • The month of your 65th birthday, coverage begins one month after
  • One month after your 65th birthday, it begins two months after you enroll
  • Two to three months after you turn 65, coverage beings three months after enrollment

If you need coverage while waiting for your Medicare to begin, what can you do? In most cases, your best option will be Short Term Medical insurance.

What is Short Term Medical?

Short Term Medical is health insurance designed to fill a temporary gap in coverage by covering you in the event of a serious injury or illness.

waiting on medicare coverage to start

Hospital visits can cost tens of thousands of dollars if you are uninsured. A Short Term Medical plan protects you from the financial and health risks of living without insurance.

This type of insurance is not compliant with the Affordable Care Act, so it does not count as coverage for the health insurance mandate to avoid a tax penalty.

However, you will not owe the fee if you have a Short Term Medical policy for no more than 2 consecutive months and claim a "short gap in coverage" exemption.

Early retirement is just one of a handful of situations where you may need Short Term Medical. Don't risk your livelihood living without insurance while you are waiting for Medicare to kick in. Do the smart thing and fill the gap with Short Term Medical.

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