05/2017 KIPLINGER’S PERSONAL FINANCE 35contributions and other benefits are
more valuable than the premium-free
Part A coverage.
I have retiree health insurance. Do I need
to sign up for Medicare at age 65? Unless
you or your spouse is still working and
has current employer coverage, you
should sign up for both Medicare Part
A and Part B at 65. Retiree coverage
can fill gaps in Medicare (which would
otherwise require medigap and Part D
policies or a Medicare Advantage plan),
but it’s secondary to Medicare after
age 65, and it may not kick in at all
if you don’t sign up for Medicare. Fed-
eral retiree coverage is an exception;
it remains your primary coverage if
you don’t sign up for Medicare, but you
will pay a penalty if you decide to sign
up for Part B later.
What’s the penalty for not signing up?
You’ll have to pay a late-enrollment
penalty of 10% of the Part B premium
for every year you should have had
coverage. The penalty applies as long
as you receive Medicare benefits. If
you miss the initial enrollment period
or the eight-month window after you
or your spouse stops working, you can
only sign up from January through
March in any year for coverage to
begin July 1.
FILLING THE GAPS
Why do I need medigap insurance? You
still have to pay deductibles and co-
payments. Most people buy a Medi-
care supplement (medigap) policy to
pay those costs, plus Part D prescrip-
tion-drug coverage because Medicare
generally doesn’t cover drugs. Or you
can sign up for a private Medicare
Advantage plan, which provides both
medical and drug coverage.
Medigap policies are sold by private
insurers and come in 10 standardized
versions (A through D; F; G; and K
through N). Every medigap plan with
the same letter designation must pro-
vide the same coverage, even though
prices can vary by insurer. You can use
any doctor or facility that is covered
by Medicare. Many state
insurance departments
have medigap price lists by
insurer (go to http://www.naic
.org and click “map” for
links). Kiplinger’s readers
can get a personalized re-
port at Weiss Medigap for
$49 (www.weissmedigap
.com/kiplinger).
Part D prescription-drug
plans are sold by private
insurers and have average
premiums of $34 per month.
You can compare premi-
ums and out-of-pocket
costs for your drugs under
each Part D plan in your
area at http://www.medicare
.gov/find-a-plan.
Medicare Advan-
tage plans combine
medical and drug cov-
erage and may also provide coverage
that isn’t available through Medicare,
such as for some dental and vision
care. Premiums average $38 per
month, which tends to be lower than
for medigap plus Part D, but you may
have more out-of-pocket costs. The
plans usually have a limited network
of doctors and hospitals, and you may
have higher costs (or no coverage) if
you go out of network. You may also
need a referral to see a specialist. You
can shop for a Medicare Advantage
plan at http://www.medicare.gov/find-a-
plan. For an analysis of the best values
based on typical costs for people in
good, fair and poor health, go to
http://www.medicarenewswatch.com.I’ve been paying high premiums for my
medigap Plan F. Can I switch to another
policy to save money? Maybe. There’s a
huge price range for medigap policies,
and you may be able to save by switch-
ing. But depending on your health and
the state where you live, your options
may be limited. Insurers cannot reject
you or charge more because of preex-
isting conditions if you buy a medigap
policy within six months of signing up
for Medicare Part B. But after that,your health can affect your costs
and coverage options. If you’re still
healthy, you may qualify for a better
deal with another insurer.
Some insurers will let you switch
to a less-comprehensive policy with-
out medical underwriting—for exam-
ple, to high-deductible Plan F, for
which you pay a $2,200 deductible in
2017 before medigap coverage kicks in.
Median premiums are $610 per year
for a 65-year-old man, compared with
$2,184 for the standard Plan F, accord-
ing to Weiss Ratings. Plan N has cov-
erage similar to that of standard Plan
F, but you pay the Part B deductible
($183 in 2017) and a $20 co-payment
for each physician visit, as well as $50
for emergency-room visits. Median
premiums are $1,448 per year.
Your state may offer special oppor-
tunities to switch, regardless of pre-
existing conditions. For example, New
Yorkers can switch medigap policies
at any time regardless of health. In
Missouri, you can switch to another
insurer’s version of your letter plan on
your policy anniversary. (Learn more
from your state health insurance assis-
tance program at http://www.shiptacenter
.org, or call 800-633-4227 for contacts.)