The Social Security Administration (SSA) and Railroad Retirement Board (RRB) for railroad retirees determine eligibility for those entitled to Medicare benefits, and they also handle enrollment of those found eligible.

SSA uses both automatic and voluntary enrollment procedures. Many people are enrolled automatically in Medicare. Others must apply in writing for Medicare coverage at a Social Security office. Note that some enrollment rules differ for Part A and Part B, including rules for some people who work beyond age 65.

For more specific information on enrollment procedures for Medicare Part A and Part B, visit HAP’s Medicare Basics SHIP Resource Guide.

Beneficiaries who are working or are covered through a spouse's active employment group health plan can delay Medicare and will not be penalized for late enrollment. Note, however, if both spouses are retired but still covered by the group plan, they likely will be assessed a premium penalty if they decide to take Medicare Premium Part A and Part B at a later date.

Medicare will pay secondary benefits to supplement the primary benefits paid by the group health plan if that plan pays only a portion of the services up to the Medicare covered rate and if the plan covers enough people.

Individuals who have premium-free Part A may benefit from keeping Part A since there is no cost to them on a monthly basis. Part A hospital coverage will be secondary to the employer group health plan and may extend employer-based coverage when it has annual or lifetime payment caps, or when coverage for home healthcare or hospice care is limited. Keep in mind that there is no copayment for Medicare's home health coverage and that there's no set limit on the number of covered visits. There is no need to enroll in Part B or premium-Part A and pay for it if the benefits are not needed. Individuals may wish to refuse Part B since there is a monthly premium and the coverage is likely to be duplicative of the employer-based coverage. Be sure to decline Part B in writing.

There is a Special Enrollment Period (SEP) for individuals who delayed enrolling in Part B (or premium-Part A) because they were covered by an employer group health plan. Once an individual stops working, they have an 8-month SEP to enroll in Medicare B to avoid a penalty. During this SEP, the individual may have to fill out, and have their former employer sign, a Social Security form stating the dates of prior coverage by their employer group health plan. Coverage will take effect on the first day of the month following enrollment.

Generally speaking there are two enrollment categories during which beneficiaries can disenroll from a Medicare Advantage (MA) plan and return to Original Medicare: annual and special enrollment.

All beneficiaries may make enrollment changes during the Annual Enrollment Period (AEP), which runs between November 15 and December 31 each year. Beneficiaries can use the AEP to switch from one MA plan to another or to leave the MA program for Original Medicare. The AEP is also a chance for all Medicare beneficiaries to enroll in or disenroll from a Medicare drug plan. The new coverage choice becomes effective on January 1 of the following year.

Limited enrollment changes may also be made during January 1 and March 31 of each year, referred to as the MA Open Enrollment Period. During this MA-OEP, beneficiaries may not enroll in or disenroll from Part D coverage, but they may make changes to how they receive their Medicare services, which can include disenrolling from a MA plan and returning to Original Medicare.

There are several situations that warrant a Special Enrollment Period (SEP) to disenroll from an MA plan. See the Eligibility and Enrollment section of HAP’s Medicare Advantage SHIP Resource Guide for a comprehensive list of these SEP opportunities.

Yes, there can be. For beneficiaries who delay enrolling in Part A 12 months or more after their Initial Enrollment Period (the 7-month period surrounding the 65th birthday), they may have a late enrollment penalty. The surcharge for late enrollment is calculated as 10 percent of the current Part A premium amount ($443 in 2009, so a $44 additional surcharge). The penalty continues for twice the number of years that enrollment was delayed, unlike the penalty for late enrollment in Part B which continues indefinitely.

The penalty generally applies to individuals who have premium-Part A, meaning they did not earn enough working credits (40) to be automatically entitled to Medicare and must pay a monthly premium to receive Part A. Upon turning 65, unless they are continuing to work and have employer group coverage, individuals who have to pay for Part A must enroll in Part A during their IEP to avoid paying a penalty later on. (They would also have to wait until the General Enrollment Period (GEP) to enroll in Part A, and simultaneously Part B.) Most individuals, however, are entitled to Part A on their work record, which means they do not have to pay a premium and are auto-enrolled. They generally avoid this penalty.

(Note in some instances a person entitled to premium-free Medicare may choose to waive Part A auto-enrollment because of other health insurance, such as a Health Savings Account, which will not allow a person to continue making contributions while on Medicare. These individuals would not incur a late enrollment penalty later on as long as they continue to work and have employer group health coverage. Upon retiring, they would have an 8-month Special Enrollment Period (SEP) to enroll in Part A and Part B.)

For more information on Part A enrollment, see the Eligibility and Enrollment for Medicare section of HAP's SHIP Resource Guide: Medicare Basics.

Individuals who enroll in Medicare Part B after their Initial Enrollment Period (IEP), and who do not qualify for enrollment during a Special Enrollment Period (SEP), will be charged a late enrollment penalty. The penalty is a 10 percent surcharge based on the standard Part B premium for each 12-month period enrollment in Part B was delayed. This penalty amount is then added to the beneficiary's monthly premium amount. Beneficiaries assessed this penalty may have slightly higher premiums to pay than other Medicare beneficiaries who enrolled in a timely manner.

For example, John celebrated his 65th birthday in 2005 and delayed enrolling in Part B until 2009. He did not have employer insurance between 2005 and 2009. His penalty is calculated as:


$96.40 (Part B standard premium in 2009)

x 0.3 (10 percent x three 12-month periods not enrolled)

$28.92 penalty

So, in addition to the $96.40 (in 2009) Part B premium, John will also have to pay and additional $28.92 every month for as long as he has Medicare.

Note that the Social Security Administration (SSA) does not count the months in a person's IEP when calculating the 12-month period to which the late enrollment penalty applies.

In most cases beneficiaries will have to pay this penalty every month for as long as they have Medicare. If they enrolled in Medicare because of a disability and have to pay premium penalties, once they turn 65, they will no longer have to pay. Beneficiaries eligible for the Medicare Savings Programs also are not assessed a late enrollment penalty.

For more information, see SSA's Program Operations Manual System (POMS), section HI 01001.010 entitled Premium Increase for Late Enrollment.

The Part B penalty amount increases as the Part B premium increases. For example, in 2009 a person assessed a 10 percent Part B penalty would pay a $9.64 late enrollment penalty through December 2009. In 2010, if the Part B premium increases, the late enrollment penalty would then adjust to 10 percent of the new Part B premium amount.

There are two important factors when calculating the Part B penalty:

1. The percentage (i.e., 10 percent for each 12 months that passed when a person could have enrolled in Part B and did not), and
2. The actual penalty amount (i.e., the premium surcharge that is added to the Part B premium).

The percentage (e.g., 10 percent for 12 months, 20 percent for 24 months, 30 percent for 36 months) will not increase each year; this percentage is fixed and is established when the beneficiary actually enrolls in Part B. The penalty amount (i.e., the dollar amount calculated from the percent owed and added to the Part B premium), on the other hand, will increase each year that the Part B premium increases. For more information on the Part B penalty, see the Social Security Administration's Programs Operation Manual System (POMS), Section HI 01001.10, entitled Premium Increase for Late Enrollment.

There is no specific Special Enrollment Period (SEP) for U.S. citizens who were in another country and decided not to enroll in Part B when they first became eligible (typically at age 65). These individuals would need to wait until the next General Enrollment Period (GEP) to enroll in Part B, and would likely face a Part B penalty for delaying enrollment.

There is, however, a SEP for international volunteers, who did not enroll in Part B during their Initial Enrollment Period (IEP). In addition, the SEP for older workers who continue to work beyond age 65 and have coverage through an employer group health plan applies to those who work for a foreign employer in another country.

The SEP for international volunteers took effect on January 1, 2007. It provides a six month enrollment period for those who gave volunteer service outside the U.S. through a program sponsored by a tax-exempt organization for at least 12 months in a row, and who had health insurance coverage during the volunteer service. The six month SEP begins on the earlier of the first day of the month that the person is no longer serving as a volunteer outside the U.S., or the sponsoring organization is no longer tax-exempt, or the person no longer has health insurance that provides coverage outside the U.S.

Medicare coverage is limited to paying dental surgeons to perform surgeries to set a fractured jaw, remove cancerous tissue, or to treat oral infections. It does not cover routine services in connection with the care, treatment, filling, removal, or replacement of teeth (although Part A pays for an inpatient hospital stay when a patient’s medical condition requires inpatient care for the safe removal of teeth).

In general, Medicare only covers oral surgery under Part B, and only in extreme circumstances that are potentially life threatening if left untreated.

Self-administered drugs during an inpatient (Part A) hospital stay are covered by Part A. Part D should cover self-administered drugs taken during an outpatient (Part B) hospital stay, as would drugs received upon discharge from a hospital. Part D drugs unrelated to the precipitating diagnosis, which are taken during an outpatient hospital stay, would be covered by a Part D plan's out-of-network coverage rules. If the drug is on the plan's formulary, the beneficiary can submit the bill from the hospital pharmacy (rarely are these Part D participating network pharmacies) to the Part D plan for coverage at the plan negotiated price.

As explained in Section 50.5 of Chapter 15, Covered Medical and Other Health Services, of CMS’s Medicare Benefit Policy Manual, Medicare Part B uses the “self-administered drug rule” to determine medical necessity. Medicare looks at the usual method for taking a drug to decide if it is usually “self-administered.” If the usual method for taking a drug is orally by tablet or capsule, or by self-administered injection, like insulin, Medicare Part B does not pay. Coverage for these drugs often is available through a Medicare Part D drug plan.

Medicare Part B covers (Section 10 of Chapter 15 of the Medicare Benefit Policy Manual) three types of immunizations: flu, pneumonia, and hepatitis B vaccines. This includes the cost and the administration of the vaccine.

Effective January 1, 2008, the Part D program began covering vaccine administration costs associated with Part D vaccines, including the vaccine for shingles. All Part D plans must include all commercially available vaccines on their formularies. Part D plans will pay for both the vaccination and for the administration. Note, however, beneficiaries should check with their Part D plan coverage rules to see if there are any specifics on where the beneficiary should go to receive the vaccination (e.g., doctor’s office, at a pharmacy). This could vary the amount a beneficiary pays for the vaccination.

In most states, individuals are eligible to purchase a Medicare Supplement policy (Medigap) during the Medigap Open Enrollment Period (OEP). During this OEP, people aged 65 and older and after they become eligible for Medicare and enroll in Medicare Part B have a 6-month period to purchase a Medigap policy. This OEP also protects older workers when they first enroll in Part B at a later date. A beneficiary has the right to purchase any Medigap policy during this time frame. Insurance companies must issue the policy and cannot turn down the applicant on the basis of poor health status.

Some states require insurance companies to sell at least one or two types of Medigap policies to Medicare beneficiaries who are under age 65, including those with disabilities. The companies must issue the policies regardless of age or health status. For more information on enrollment rights and choosing a Medigap policy, see CMS’s booklet, 2009 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare.

Beneficiaries who are under the age of 65 and eligible for Medicare (due to a disability or end-stage renal disease) do not fall within the scope of the federal open enrollment provisions for purchasing a Medigap policy. They will be eligible for the 6-month open enrollment period when they turn age 65.

However, some state regulations require insurance companies to offer a limited Special Enrollment Period (SEP) to under-65 Medicare-eligible beneficiaries. (In 2009, there are 22 states selling policies to under-65 Medicare beneficiaries. A complete list of these states is available on Medicare’s website.) In some cases though, state legislative mandates limit these under-65 beneficiaries access to certain Medigap policy types, and often they will pay significantly higher Medigap premiums.

Insurance companies use different methods to set or rate their prices. The three most common rating methods are:

• Issue-age rating: premium is based on the beneficiary’s age at initial purchase
• Attained-age rating: premium is based on a beneficiary’s current age (usually fairly low) and increase with age
• Community rating: premium is the same for all policyholders in a geographic area regardless of age

Most insurance companies use one of the age-rating methods to set their premiums. Relatively few use the community rating method. Community rating, though, can work to an older beneficiary’s advantage when changing Medigap companies or when a retiree group plan becomes too costly or ceases to exist.

For more information on the costs and coverage of Medigap policies, see The Cost of Medigap Insurance section of HAP’s Medicare Basics SHIP Resource Guide.

Also, for more information on Medigap policies in your state refer to your state insurance department. State insurance departments regulate the companies and agents that sell Medigap insurance.

Some insurance companies also offer Medicare SELECT policies for Medigap Plans A - J. Medicare Select policies cover the same gaps as regular plans A - J, except that they require beneficiaries to the use certain providers, typically hospitals, in non-emergency situations. SELECT policies usually cost less than regular policies.

For more information on these policies, see CMS’s booklet, 2009 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare. Or, contact your state insurance department to find out if these policies are available in your state.

Though individuals can have a Medigap policy while enrolled in an MA plan, they cannot use the Medigap policy to cover any cost gaps in their MA plan (e.g., premiums, deductibles, copayments). That is because Medigap policies do not work with MA plans, including HMOs, PPOs, Private-Fee-For-Service (PFFS) plans, Special Need Plans, and Medicare Medical Savings Accounts (MSAs).

MA plan enrollees, therefore, should not buy Medigap insurance. MA plan enrollees paying premiums for Medigap policies are paying for something they cannot use. Medigap policies will only pay for services when Original Medicare makes payment on a claim. For more information on costs and coverage benefits of Medigap policies, check out the Medigap Overview section of HAP’s Medicare Basics SHIP Resource Guide.

The answer is that it depends upon the state. Generally, as long as the retiree coverage is offered by a former employer or union as a retiree group benefit, and it is not considered Medicare Supplement insurance (Medigap policy), an individual could have both the retiree plan and a Medigap policy. Visit your state insurance website and review your state insurance rules to make sure there are not any additional restrictions with regards to purchasing additional health insurance.

There may be some confusion around this because of the legislation passed with the Omnibus Budget Reconciliation (OBRA) Act of 1990. This federal reform law includes provisions designed to protect consumers. One such provision of OBRA ’90 (See Section 4354) was against insurance agents from selling duplicate Medicare supplement (Medigap) insurance policies to consumers. Prior to OBRA ‘90, this practice by agents was a common occurrence. Note, however, the statute restriction is against selling duplicate insurance as it applies only to Medicare supplement (Medigap) insurance policies.

As retiree group plans cost more and cover less, beneficiaries may be asking if they should drop these plans and buy a Medigap policy or join a Medicare Advantage (MA) plan. It is very difficult if not impossible to make “apples to apples” comparisons among group plans, Medigap policies, and Medicare Advantage (MA) plans. Beneficiaries should review the group plan’s coverage outline carefully, and call the plan’s benefits office to ask questions. Beneficiaries should ask about out-of-pocket costs for hospital, physician, and other services. Sometimes a plan’s prescription drug coverage could be well worth the cost. On the other hand, some plans are a waste of money. Also, beneficiaries should be aware that they may not be able to return to a group plan if they drop it. In some cases, however, an individual may need his retiree health plan, such as to cover his under-65 spouse. In this case, it’s not unusual to see beneficiaries paying for both.

For more information on choosing a Medigap policy, see CMS’s booklet, 2009 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare.

The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) authorized states to adopt the new National Association of Insurance Commissioners (NAIC) model for their standard Medigap policies, which NAIC’s Senior Issues Task Force had been developing since 2005.

During 2009, states must begin implementing the new model standards either by enacting legislation or adopting regulations. Starting June 1, 2010, insurance companies must offer Medigap policies that comply with the new standards.

After June 2010, companies can no longer sell Medigap Plans H, I, J, and high-deductible Plan J. The new standards also end the at-home recovery, preventive care, and 80 percent of excess charges benefits.

Two new Medigap policies—Plans M and N—will join Plans A, B, C, D, F, high deductible F, G, K, and L.

• Plan M will include the basic benefit—50 percent coverage for the Part A deductible, full coverage for the Part B coinsurance charge, and foreign travel emergency coverage.
• Plan N will include the basic benefit, full coverage for the Part A deductible, coverage for the Part B coinsurance charge (except for a $20 co-payment for office visits), a $50 co-payment for emergency room visits, and foreign travel emergency coverage.

For more on other MIPPA-related changes, visit HAP’s MIPPA Act: Changes Effective January 1, 2009 webpage.

Retirees have a guaranteed issue right when their existing employer group plan was set up as an “employee welfare benefit plan” as defined by the Employee Retirement Income Security Act (ERISA).

State insurance rules based on the National Association of Insurance Commissioner’s (NAIC) model regulation make clear that a Medigap guaranteed issue right exists when,

“[t]he individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under Medicare, and the plan terminates, or the plan ceases to provide all such supplemental health benefits to the individual.”

Thus, the switch from a traditional employer group plan to a Medicare Advantage group plan, or a significant reduction in the group plan’s supplemental benefits, trigger a guaranteed issue right with a time frame that generally starts on the day that the employer welfare benefit plan coverage ends, and lasts for 63 days. For more information on Medigap and guaranteed issue rights, see the Medigap Insurance and Other Supplemental Insurance section of HAP's SHIP Resource Guide: Medicare Basics.

The beneficiary can keep his current Medigap policy after he moves, as long as he stays in Original Medicare. The National Association of Insurance Commissioners' (NAIC) Model Regulation says that each Medicare supplement policy shall be guaranteed renewable and that an insurer "shall not cancel or non-renew the policy for any reason other than nonpayment of premium or material misrepresentation."

In the case of Medicare SELECT policies, where beneficiaries must use certain providers (except in emergencies) to receive the full benefit of the supplement insurance policy, the NAIC Model Regulation provides a guaranteed issue right for beneficiaries who change their place of residence.

For more information on Medigap and guaranteed issue rights, see the Medigap Insurance and Other Supplemental Insurance section of HAP's SHIP Resource Guide: Medicare Basics.

Though federal law established an annual open enrollment period for Medicare Advantage (MA) plans, no federal rule requires insurers to offer a similar opportunity for people to switch Medigap policies with a guaranteed right to purchase another policy.

Some states, however, have created Medigap open enrollment windows. Missouri, for example, gives a guaranteed issue right to a policy holder who terminates her Medicare Supplement coverage within thirty days of the policy's anniversary date. The guaranteed issue period takes effect on the day of disenrollment and continues for 63 days. Insurers cannot impose a pre-existing condition exclusion on beneficiaries who exercise this right.

For more information on Medigap and guaranteed issue rights, see the Medigap Insurance and Other Supplemental Insurance section of HAP's SHIP Resource Guide: Medicare Basics.

Section 12 of the National Association of Insurance Commissioner's (NAIC) model regulation for Medigap insurance says that an individual who is no longer eligible to elect a Medicare Advantage plan "because of a change in residence or other change in circumstances specified by the Secretary of the U.S. Department of Health & Human Services (HHS)," has a guaranteed issue right for Medicare supplement insurance.

Thus, because federal rules specify that beneficiaries who lose their dual eligibility status have a Special Enrollment Period (SEP) to disenroll from a Medicare Advantage plan, it appears that ineligibility for a SNP-D due to a change in income would be an "other change in circumstance specified by the Secretary…."

For more information on Medigap and guaranteed issue rights, see the Medigap Insurance and Other Supplemental Insurance section of HAP's SHIP Resource Guide: Medicare Basics.