MONEY

Think Health Care is Pricey? Get Ready to Spend Even More

pile of prescription medicine pills and tablets
Jan Mika—Shutterstock

Soon one out of every five dollars Americans spend will to go healthcare.

For the past six years Americans have gotten a respite from fast-rising health care costs. No more.

With millions of baby boomers entering retirement and pricey new drugs hitting the market, U.S. health care spending, which had increased at relatively moderate 4% rate since the financial crisis, grew 5.5% last year, according to a new government study reported on Tuesday by The Wall Street Journal.

You can expect more too. The actuaries who calculated the figures, project that spending will average 5.8% between 2014 and 2024. By then, health care as a share of the nation’s overall economy will have grown to 19.4% from 17.4% in 2013. In other words, our nation’s medical bills will account for one out of every five dollars we spend.

The changes aren’t totally unexpected. A big part of the extra costs are tied to the fact that baby boomers — many now in their 60s — are requiring more care. Important but expensive new drugs, like one that helps treat Hepatitis C, are also a factor, according the Journal.

Still, the rising costs aren’t good news, especially considering a key promise of the Affordable Care Act, which brought access to health insurance to millions of Americans, was to get the growth in health care spending under control, a goal known as “bending the curve.”

For people who get their health insurance coverage at work, rising costs are likely to mean a continued push by employers toward high-deductible plans, which can have steep out-of-pocket costs. Read here for more on tools for keeping medical bills under control.

MONEY Medicare

How Medicare’s New Rules May Improve Eldercare Benefits

caregiver helping woman with cane
Dave and Les Jacobs—Getty Images

As the number of elderly Americans soars, Medicare is testing improved benefits for seriously ill seniors.

Medicare recently announced new rules that may ease the challenges of senior health care. The changes put a new focus on improving treatment of the seriously ill, as well as better planning for end-of-life care.

These reforms are much needed and long overdue. As millions of baby boomers move into retirement, record numbers of Americans are growing older. And these seniors, along with their family members, will need all the help they can get to help them navigate their final days. Here’s how Medicare is attempting to cope with these demands.

The Caregiving Challenge

Right now, the nation’s current caregiving system relies heavily on the efforts of family members—and it falls far short of meeting demand. As a recent AARP study amply documents, family caregivers are already experiencing a rising financial, emotional, and career toll. It’s unlikely that the system will be able to meet even greater demand from a growing number of aging Americans.

Seniors who need assistance with daily living can’t get much help from Medicare, which does not cover long-term care. The program restricts its coverage to short-term stays in skilled nursing facilities for seniors who have diagnosed medical needs—usually following hospital stays. Private long-term care insurance is costly and insurers have been leaving the industry or raising premiums as they struggle with higher-than-anticipated claims expenses.

Medicaid is the long-term care insurer of last resort, but that program faces its own enormous financial challenges. And the quality of care provided by many nursing facilities is uneven, at best, and scandalous at worst. The widespread use of antipsychotic drugs in many nursing homes can amount to warehousing of the worst kind.

More Comprehensive Care

In its first move towards addressing these issues, Medicare announced in early July that it would pay physicians to have end-of-life conversations with patients and their families. This is a major reform, since the program typically reimburses doctors only for procedures, such as testing or treatments.

The details of this rule, which would take effect next year, are still to be finalized. But it’s clear that these conversations are the farthest thing possible from the mythical “death panels” that Sarah Palin and others were talking about before the 2012 elections.

Instead, these conversation can be life panels. Doctors can provide invaluable support and clarity about medical decisions that people need to think about, including the care they wish to receive near the end of their life, and how patients’ families can provide the help and support that are so important.

Easing Access to Hospice

Following easing of physician reimbursement rules, the Centers for Medicare & Medicaid Services (CMS) announced a second significant shift in end-of-life care. Beginning in 2016, Medicare will launch a large-scale test that will cover expanded hospice care. In addition to providing palliative care, which provides physical and emotional comfort to seriously ill patients, the Medicare pilot project will cover continued curative treatments to slow, if not halt, those underlying conditions.

Right now, ailing seniors and their families are faced with a wrenching choice: continue receiving curative therapies or end their efforts for a cure and enroll in a hospice program. Once in hospice, they normally have been required to end efforts to aggressively treat their illnesses and agree to receive only palliative care.

The hospice care model, including at-home care, has become increasingly popular as a more nurturing and less costly means of providing care than more traditional institutional settings. Some research also has found that hospice patients often survive longer than patients with similar diseases in active-care treatment settings.

The new test program will allow participating patients to continue treatments aimed at prolonging their lives. About 140 hospices around the country will participate in the test, half beginning next year and half in 2018. Their goal is to treat 150,000 Medicare beneficiaries during the five-year test period—that’s five times more patients than the test program originally planned.

Better Consumer Data

At the same time, Medicare is also working to provide improved performance information about the care that seniors receive. Last week, CMS announced it would begin providing “star” ratings that measure the quality of care of home health agencies, which have become increasingly important providers of care to Medicare beneficiaries.

Earlier this year, the agency beefed up its evaluations of nursing homes and now also provides star ratings of their performance.

Seniors, and especially adult family members who help them, need to learn more about their options about end-of-life care. Of equal importance, they need to have discussions before a crisis hits about how they wish to end their lives, including creating living wills, health care proxies and other advanced care directives. The Conversation Project is a good source of help for approaching these crucial family discussions.

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

Read next: Cutting the High Cost of End-of-Life Care

TIME medicine

Doctors Say Cancer Drug Costs Are Out Of Control

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JUAN GARTNER—Getty Images/Science Photo Library RF Illustration of cancer cells in middle of dividing

Prescription drug prices rose 12% in 2014

A group of 118 oncologists put their foot down on the rising costs of cancer medication in an editorial in the Mayo Clinic medical journal, the Mayo Clinic Proceedings, on Thursday. The editorial threw its support behind a grassroots patient effort to push for fairer prices from drug companies.

According to the editorial, many cancer patients are bankrupted by the high cost of care. Even for insured patients, a treatment that costs $120,000 a year might only be reduced to $30,000 in out-of-pocket expenses–more than half the average U.S. household income. The cost of drugs is so high that as many as 20% of oncology patients don’t take their medication as prescribed.

Cancer drugs were not always so expensive. Over the past 15 years, according to one study in the Journal of Economic Perspectives, the cost of cancer drugs rose by 10% (or about $8,500) every year. In 2014 alone, prescription drug prices rose 12%.

“High cancer drug prices are affecting the care of patients with cancer and our health care system,” the lead author, Dr. Ayalew Tefferi, who is a hematologist at Mayo, said. The doctors designed a list of ideas that would make cancer drugs more affordable for the people they treat.

The group’s solutions included a proposal to allow individuals to import cancer drugs from other countries, where the medicine is far cheaper. In Canada, for example, oncology drugs are half the price of American ones.

Other solutions included creating a regulatory body that would propose fair pricing after a drug gains F.D.A. approval, allowing Medicare to negotiate drug prices, and preventing pharmaceutical companies from delaying access to generics.

“It’s time for patients and their physicians to call for change,” Dr. Tefferi said.

MONEY Medicare

What You Can Expect from Medicare on Its 50th Anniversary

Doctor prescribing medication to senior man
Getty Images

As it turns 50, Medicare faces big financial shortfalls and sweeping changes.

America’s landmark government health care programs, Medicare and Medicaid, celebrate their 50th anniversaries on July 30th. (The other key safety net, Social Security, turns 80 in August.) Decades into operation, the future of these plans is still hotly debated in Washington, as policymakers wrangle over needed changes in their finances. Two major reforms are already underway, which I’ll address in a moment.

Meanwhile, outside the Beltway, where real people (aka voters) live, there is little debate about the value of these programs. We like our Medicare and Medicaid—a lot. Republicans, independents and Democrats all feel this way, and by big, big majorities.

The Kaiser Family Foundation, which closely tracks Medicare developments, recently conducted an anniversary opinion poll. Here’s how the public responded:

*Keep Medicare intact. By two-to-one margins, people of all political persuasions favor preserving Medicare in its current form, as opposed to replacing it with vouchers or other forms of premium support.

Among people ages 65 and older, 85% of Republicans, 89% of independents, and 92% of Democrats say Medicare is very important. And roughly 90% of those using Medicare and Medicaid report positive experiences with the programs. While Medicaid was once viewed as health insurance for poor people, any stigma associated with the program has largely disappeared. If people need it, they’ll sign up for it, Kaiser said.

*Improve Medicare’s finances. People are concerned about the future of Medicare, and two-thirds of those surveyed support changing the program to make sure it’s around for future generations. Nearly 60% also support raising Medicare premiums for wealthier seniors. There was little support for raising the Medicare eligibility age or general cost increases for all beneficiaries.

By contrast, nearly nine in ten people want to empower Medicare to negotiate with drug companies over their prices, making it the most wisely supported financial reform. This move is expressly forbidden under the 2003 law that created Part D prescription drug insurance.

*Not enough coverage. Kaiser also found that nearly a third of Medicaid beneficiaries and more than 20% of those on Medicare reduced their use of dental, vision, and hearing care because they couldn’t afford them and the items were not covered by the programs.

Reforms on the way

While the public expects Medicare tomorrow to look much like it does today, the Centers for Medicare & Medicaid Services (CMS) has announced major reforms that will change the way healthcare providers are paid for their services. Instead of being reimbursed for based on the number of services or tests conducted, providers will increasingly be paid based on the quality of the work they do and on how well it helps improve patient health.

That policy is likely to include paying physicians to have conversations with patients about how they would want to be treated if they are too ill to express their wishes. Previous plans to encourage end-of-life discussions were derailed in 2009, when Sarah Palin denounced the plan as an effort to set up “death panels.” Today, with millions of boomers aging and more patients wanting a say in their own treatment, these policies have broad support.

At the same time, CMS is pushing providers to coordinate care for Medicare patients. Doctors, hospitals and other care providers will be expected to work together, and their compensation eventually will also be determined by patient outcomes and improved health.

Looking 50 years ahead

These reforms, while significant, are modest compared to the vision that Medicare’s creators had for the program 50 years ago. Back in 1965, Medicare was expected to be the first big step toward universal health care. As Jonathan Oberlander and Theodore R. Marmor write a new collection of 50th anniversary essays about the programs:

“They never imagined that, a half-century after its birth, Medicare would look as it does today, with seniors comprising the vast proportion of its enrollees. Medicare, they expected in 1965, would soon expand far past social insurance protection for the elderly and would evolve into a full-scale system of national health insurance for all Americans.”

There are many reasons why this did not come to pass. But perhaps the single most important factor was the Vietnam War, which soaked enormous sums from the federal budget and diverted the attention of Presidents Lyndon Johnson and Richard Nixon away from any serious efforts to expand Medicare as its creators had hoped.

Will Medicare ever grow into the broader health care program its creators envisioned? Today’s political gridlock makes that scenario unlikely. Of course, over the next decades, it’s possible that a new consensus will emerge that brings about a national health insurance program. But the American people will have to make it a priority. Let’s check back in 2065.

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

Read next: Here’s What to Do When You’re Ready to Sign up for Medicare

MONEY Medicare

Why You Should See a Dentist Before You Retire

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Peter Dazeley—Getty Images

Most seniors pay for dental care out of pocket.

If you plan to retire soon, add this item to your to-do list: a visit to the dentist before your dental insurance disappears.

Retirees transitioning to Medicare are often surprised to learn that the program does not cover routine dental care or more complex procedures.

Overall, 40% of the 65-plus population has some form of dental benefit, according to the National Association of Dental Plans. For seniors who use Medicare Advantage managed care plans, about half offer very limited coverage for cleanings and exams. A small percentage of seniors have dental insurance from a former employer, and Medicaid covers dental care for low-income residents in some states, although benefits vary. Some buy individual commercial plans or have coverage through an association such as AARP.

But most seniors just pay for dental care out of pocket – the mean expense for Americans age 65 and older was $870 in 2012, according to the Agency for Healthcare Research and Quality, a research arm of the U.S. Department of Health and Human Services.

The costs can be far higher for more complex procedures. The average cost of a crown in New York City is $2,500; a periodontal procedure in Los Angeles costs $1,700, according to Fairhealthconsumer.org, a service that tracks prices of healthcare and health insurance.

Those numbers help explain why 34% of seniors had not seen a dentist in two years in 2010, and 22% had gone without care for the past five years, according to the Kaiser Family Foundation (KFF).

“Dental care is conspicuously absent from the health care coverage for older adults,” says Dora Fisher, director of older adult programs at Oral Care America, a nonprofit group that advocates for better oral health.

Medicare celebrates its 50th anniversary later this month, and adding basic dental coverage is on the wish list of many health policy experts reflecting on the program’s future.

Research shows clear links between poor oral health, diabetes and heart disease. One out of four Medicare beneficiaries has edentulism – that is, they no longer have any of their natural teeth, according to KFF; that can cause other health issues, such as nutritional deficiencies and problems with speech.

Pricing Options

Premiums for private plans, are reasonable – PPO plans cost around $15 per month, Ireland says. But individual coverage is not as robust as group dental plans. “Most have waiting periods before coverage for major procedures begins, and the dollar caps on coverage may be lower,” she says.

Ireland adds that dental insurers have been negotiating with the federal government to offer individual standalone dental plans (independent of health insurance) through the Affordable Care Act insurance exchanges, and she hopes expanded offerings will start showing up in 2016 or 2017.

Dental plans are available on many exchanges now, but they can only be purchased along with general health insurance. That effectively cuts out seniors, who are covered by Medicare.

Consumer advocates are pushing for Medicare to pay for dental care made necessary by other procedures that the program does cover. The Center for Medicare Advocacy (CMA), a non-profit legal organization, has filed lawsuits on behalf of cancer patients who have been denied coverage for dental procedures made necessary due to aggressive radiation of the head and neck.

“Medicare covers what happens to the patient’s eyes even though it doesn’t provide routine eye care – but there’s no coverage for this type of extreme dental care, and people are ending up in the hospital with infections,” says Margaret Murphy, an associate director and attorney with CMA. The Centers for Medicare and Medicaid Services did not respond to requests for comment.

The litigation has not been successful so far, but CMA has not given up. “We’re trying to figure out where to go with it next,” Murphy says.

MONEY Opinion

4 Agenda Items Missing From Monday’s White House Conference on Aging

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Getty Images

The agenda for the July 13th conference overlooks some of the most pressing issues facing seniors today.

When presidents call Americans together to talk about aging, major change is possible. The first White House Conference on Aging in 1961 played a midwife’s role in the birth of Medicare; the 1971 conference led to creation of the automatic cost-of-living adjustment for Social Security, which has been in place since 1975.

This year’s conference, set for Monday, July 13, could have similar impact in a country facing the challenges of a rapidly aging population.

Unfortunately, I’m not optimistic that this year’s summit will be as productive as past ones have been. While I’d love to be proven wrong, the agenda overlooks too many important issues: rapid diversification of our older population, retirement inequality and assigning a bigger role to Social Security, and finding a way to protect pensions and Medicare.

Also, a failure by Congress to fund the event forced a sharp downsizing, limiting the number of voices that will be heard.

All in all, it’s shaping up as a missed opportunity at a time when aging in America is a growing challenge. In 2050, the 65-and-older population will be 83.7 million, almost double what it was in 2012, according to the U.S. Census Bureau.

Four broad topics will be considered: retirement security, healthy aging, preventing elder financial exploitation and abuse, and long-term services and supports. All are important, but much of the agenda reads like a rehash of ideas the Obama administration has been promoting for years, especially in the area of retirement security.

“The White House can always get a bunch of people together to talk about its own initiatives, but that isn’t the idea behind the conference on aging,” said Paul Kleyman, a longtime observer of trends in aging who was a delegate to the 1995 aging conference hosted by President Bill Clinton. “They’re using a talking points format to say ‘Here’s what we think and want to do,’ without really taking in and assessing what an aging nation is saying needs to be done.”

On the plus side, the agenda highlights the need to eliminate conflicted financial advice, and includes questions about how to better promote healthy aging.

Also up for discussion is how to help people age in place. A recent report from the National Association of Area Agencies on Aging (n4a) found that the biggest challenges seniors face concern inadequate transportation, living independently and finding affordable housing.

“The most frequent calls for help that we hear concern aging at home and staying in the community,” said Sandy Markwood, n4a’s chief executive officer. “That is the goal of most individuals. Rarely do we hear anyone saying, ‘I just can’t wait to go into an institutional setting.’ ”

But so much is missing. For starters, the rising importance of ethnic, non-white and LGBT elders. Kleyman, who directs coverage of ethnic elders at New America Media, noted that the percentage of ethnic and non-white elderly in the 65-plus population will double by 2050, to 42 percent. LGBT seniors, while smaller in total numbers, face discrimination in housing and healthcare.

Longevity Inequality

Another omitted topic: the pressing moral issue of inequality in longevity. White men with 16 or more years of schooling live an average of 14 years longer than black men with fewer than 12 years of education, according to the Centers for Disease Control.

Racial and gender and racial disparities also are evident in wealth and retirement income, another issue that gets short shrift. Instead, we get a rehash of ideas the Obama Administration has been hawking for years now: auto-IRAs at the federal and state levels, better access to workplace saving plan enrollment and simplified requirement minimum distribution rules.

The discussion of Social Security looks like it will be especially disappointing. The policy brief embraces generalities about “strengthening Social Security” without mentioning the boldest, smartest idea being advanced by the left flank of the President’s own party: expansion of benefits focused on low- and middle-class households. Finding ways to protect traditional pensions? Preserving Medicare as a defined benefit, and defending it against voucherization? Those are nowhere to be found.

The conference should be talking about the upside of aging, along with ways to encourage trends such as encore careers by fighting age discrimination in hiring, getting more employers to support phased retirement and re-thinking how higher education can serve older adults.

Plenty of advocates would like to raise these issues, but most won’t be present due to the funding constraints. Actual delegates will be replaced by an audience of hand-picked dignitaries; everyone else will be relegated to watch parties and submitting questions via social media.

So, let’s get the party started: @whitehouse. Take a wider, more inclusive view of aging in America.

TIME Healthcare

Medicare to Cover End-of-Life Counseling

Counseling would be entirely voluntary for patients

(WASHINGTON) — Medicare says it plans to pay doctors to counsel patients about end-of-life care.

That’s a turnabout for the idea that sparked accusations of “death panels” and fanned a political furor over President Barack Obama’s health care law six years ago.

The policy change, effective Jan. 1, was part of a massive regulation issued Wednesday.

It suggests that what many doctors view as a common-sense option is no longer seen by the Obama administration as politically toxic.

Counseling would be entirely voluntary for patients.

Some doctors already have such conversations. But an opening to roughly 55 million Medicare beneficiaries could make that far more common.

Before former Alaska Gov. Sarah Palin ignited the “death panels” outcry, there was longstanding bipartisan consensus about helping people to better understand their end-of-life choices.

MONEY Medicare

Here’s What to Do When You’re Ready to Sign Up for Medicare

Just follow these three steps to get coverage.

You’ve probably heard that Medicare enrollment rules are complicated. And it’s true—knowing when to sign up, or even if you need to if you working at 65, takes some research. But the good news is that actually signing up for the benefit is a relative breeze.

To enroll, there are three key steps to follow. But before you do anything, be sure you know exactly what kinds of Medicare coverage you want. Part A (hospital insurance) is free to those who have worked long enough to also qualify for Social Security retirement benefits. You can also qualify for free Part A if your spouse qualifies for Social Security.

Medicare Part B covers expenses for doctors, equipment and other outpatient expenses. The Part B application form itself has only a dozen lines for things like your name, address, and Social Security number. Still, it is surrounded by four pages of explanation.

Together, Parts A and B constitute basic or “original” Medicare, which is the coverage choice for some 70% of Medicare beneficiaries. The other 30% opt for Medicare Advantage plans through private insurers. But they still need to sign up first for Parts A (automatic for most enrollees) and Part B. Now here’s how to enroll:

1. Start with Social Security. Medicare enrollment is administered by the Social Security Administration, which offers three options for signing up for basic Medicare. Given how important this is, my feeling is that it’s best to enroll in person. I suggest you make an appointment at your local Social Security office—don’t just drop in unannounced. You can call 1-800-772-1213 to schedule your visit. Make sure you check out the hours when the office is open.

If you choose not to take the in-person route, you can simply enroll by phone. Just call the number listed above. But be very clear that you want to sign up for Medicare only (assuming that’s the case.) The person on the other end of the line is there to handle applications for lots of Social Security benefits as well, not just Medicare. You don’t want to accidentally sign up for Social Security as well.

You can also sign up online, which Social Security has been encouraging people to do both for retirement benefits and Medicare. Their online application emphasizes that you need not visit an office. If you do opt for online enrollment, make sure you read this brief guide or view the video that explains how to sign up. The agency also provides a checklist of information you will need before signing up.

2. Take care of Medigap. Once you have basic Medicare in place, you’ll need to make decisions quickly on other forms of coverage. If you want a Medigap policy, which covers many things not covered by basic Medicare, you should sign up within six months of getting Part B coverage. During this period, you have what’s called a guaranteed issue right of being able to buy a policy regardless of any adverse existing health issues. You are protected from excessive premiums related to either your age or your age.

If you miss this window, however, all bets may be off. Insurance companies are not required to sell you these policies and can charge you much higher rates if they do. (There are special circumstances, such as losing access to a retiree health insurance policy, that will trigger a 63-day window during which your guaranteed rights are restored.)

3. Consider Medicare Advantage and Part D. If you want a Medicare Advantage plan or a Part D drug plan, their enrollment windows are the same as for Medicare Part B. You must first sign up for basic Medicare before contacting a private insurer for a Medicare Advantage Plan or a stand-alone Part D plan.

Signing up for Medicare would be even easier if the government made additional efforts to educate people about the process and alerted them to their possible upcoming enrollment windows.

Five U.S. House members recently sent a letter to the heads of the agencies responsible for Medicare, asking them to do just that. A spokeswoman for the group said their letter was based in part on a report last fall from the Center for Medicare Rights.

“No federal entity is currently responsible for notifying people nearing Medicare eligibility about the need to enroll if they are not already receiving Social Security benefits,” the report said. After 50 years in business, Medicare can do a lot better here.

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

Read next: When Good Investments Are Bad for Your Retirement Savings

MONEY Medicare

How to Time Your Medicare Enrollment

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Robert A. Di Ieso, Jr.

Q: When should I sign up for Medicare?

A: Most pre-retirees know that Medicare coverage kicks in when you turn 65. But that’s not the whole story. If you want to enroll in Medicare without hassles and costly penalties, you need to know exactly when to sign up for the program you want. There are different enrollment periods, so it’s trickier than you might think. Many older Americans fail to sign up at the right time, which can lead to higher premiums or leave you with coverage gaps, studies have found.

First, though, there are exceptions to the age 65 sign-up date. You may still be covered by your employer’s health care plan, for example, or if you are eligible for Medicare due to a disability, you can sign up earlier.

Initial Enrollment Window: Medicare has established a seven-month Initial Enrollment Period, which includes the three months before you turn 65, your birthday month, and the three months afterward. This window applies to all forms of Medicare—Parts A (hospital), B (doctor and outpatient expenses), C (Medicare Advantage), and D (prescription drugs).

Medigap Enrollment: There is a separate six-month open enrollment period for Medicare Supplement policies (also called Medigap), which begins when you’ve turned 65 and are enrolled in Part B. During this period, insurers must sell you any Medigap policy they offer, and they can’t charge you more because of your age or health condition. This guaranteed access may be crucial because if you miss this window and try to buy a Medigap policy later, insurers may not be obligated to sell you a policy and may be able to charge you more money.

General Enrollment: If you missed enrolling in Part A or B during the Initial Enrollment Period, there is also a General Enrollment Period from January 1 through March 31 each year. Waiting until this period could, however, trigger lifetime premium surcharges for late Part B enrollment, which can end up costing you thousands of dollars. And your coverage won’t begin until July.

Part D drug coverage is not legally required. But if you don’t sign up for it when you first can, and later decide you want it, you will face potentially large premium surcharges. For example, if you missed enrolling during your initial enrollment period and then bought a policy, a premium surcharge would later take effect if you were without Part D coverage for 63 days.

Special Enrollment: There are lots of special conditions that can expand your penalty-free options for when you sign up for Medicare. And there also are what’s called Special Enrollment Periods for people who’ve moved, lost their employer group coverage or face other special circumstances. These special periods may have enrollment windows that differ in length from the standard ones.

Philip Moeller is an expert on retirement, aging, and health. He is co-author ofThe New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

Read next: How to Make Sure Medicare Really Covers Your Hospital Stay

 

MONEY Medicare

How to Avoid Losing Out on Medicare If You’re Still Working at 65

Older workers need to watch out for these Medicare enrollment mistakes.

For anyone who plans to keep working after they turn 65—and that’s a growing number of people—planning for Medicare can be complicated. Last week’s column discussed the dizzying array of enrollment periods and other sign-up timetables for people who turn 65 and sign up for Medicare. In this column, I’ll explain the tricky transition from employer insurance to Medicare.

Roughly a third of Americans aged 65 to 69 remain in the work force—a rate 50% higher than only a decade ago. So the adage that everyone must get Medicare when they turn 65 is not true for more and more older Americans.

If you continue to work and have employer group health insurance, you probably do not need to sign up for Medicare. Also, if you lose employer coverage and do get Medicare, and then get a new job with employer health coverage, you usually will not need to keep Medicare. This often surprises people who think they must remain covered by Medicare for the rest of their lives once they get it the first time.

That said, there are exceptions and caveats to that general rule. So to avoid potential stumbling blocks, consider these three key guidelines:

Small business workers may need to sign up. If you’re about to turn 65, and you work for an employer with fewer than 20 workers, yes, you probably need to sign up. In these small-employer plans, Medicare becomes what’s called the primary payer of covered insurance claims for employees 65 and older. Your employer plan is the secondary payer.

If you fail to enroll, Medicare can deny you primary health insurance for many months. And when you finally do sign up, you often face premium surcharges that will last the rest of your life, which could cost you thousands of dollars. As a I mentioned last week, the initial enrollment window for Medicare lasts for seven months—three months before turning 65, the month you turn 65, and three months after your birthday month.

Check your employer’s Part D plan. For people working for larger employers, you don’t face this enrollment rule. However—and there are almost always howevers when it comes to Medicare—there’s a technical requirement for avoiding Medicare coverage, which could be a potential stumbling block to coverage.

Medicare requires that a person’s employer drug coverage be “creditable”—meaning that it must be at least as good as a Medicare Part D prescription drug plan. If that’s not the case, the person would need to sign up for a Part D plan. If you don’t, you will face lifetime premium surcharges for failing to do so on a timely basis.

How likely is it that your drug coverage would not be credible? Honestly, I have never gotten a reader question or spoken to anyone whose employer drug coverage was found to fall short. But if it did, the employee likely would not know until it was too late. Since it is a rule, employees approaching 65 should get confirmation from their human resource manager that your drug coverage passes this test.

Consider signing up for Part A anyway. Even if you do not need to enroll for Medicare at age 65, you should probably sign up for Medicare Part A, which covers hospital expenses and short-term stays in nursing homes. Part A premiums are waived for people whose work records qualify them for Social Security. Normally, this requires working 40 quarters in jobs where Social Security payroll taxes are paid.

Medicare Part A is a secondary payer in this scenario, which means it can help out with expenses not covered by employer group insurance. It does carry a steep-sounding deductible of $1,260 for each covered stay. But the cost of even brief hospital stays easily can soar to many multiples of this deductible, making Part A a nice benefit to have.

Signing up for Part A does have a big downside. By doing so, you will no longer be eligible to contribute to a tax-advantaged health savings account (HSA). If you have an HSA now, you will need to compare the potential benefit of Part A coverage with the loss of your ability to contribute to the account. If you choose to give up contributing to your HSA, however, you will still keep any accumulated funds for as long as you wish. And that money won’t be taxed if you spend it on qualified medical expenses.

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

Read next: This Is the Biggest Mistake People Make When Signing Up for Medicare

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