Signing up for Medicare? Read this cautionary tale first

Editor’s Note: Journalist Philip Moeller, who writes widely on aging and retirement, is here to provide the answers you need in “Ask Phil.”

Today’s column is an excerpt from Phil’s new book, “Get What’s Yours from Medicare: Maximize Your Coverage, Minimize Your Expenses,” published Oct. 3. The book is a companion guide to “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security,” written by Phil and Making Sen$e’s Paul Solman and Larry Kotlikoff.

As Phil notes, “The book (and I) owe much to the many PBS readers whose questions have helped identify problems and confusion about Medicare and how it works.” We hope you enjoy this next excerpt and keep sending Phil your Medicare questions.

— Kristen Doerer, Making Sen$e Editor

There are three really big deals about getting Medicare right:

  1. Enroll at the right time. Medicare has a bewildering mix of enrollment periods. You need to use the right one.
  2. Choose the right mix of Medicare coverage. There are only two main paths here. One is Original Medicare (Parts A and B), perhaps with a Medigap supplemental policy plus a Part D prescription drug plan. The other is a Medicare Advantage plan, which usually includes a Part D plan.
  3. Understand what these various parts of Medicare cover and how to use them.

And now on to Phyllis.

Let this story be your cautionary guide for the more practical roadblocks that Medicare may erect. Phyllis is pretty much always the sharpest tack in the box. While she loved being a partner in a big corporate law firm, she finally retired from the firm when she turned 75. Like many sharp tacks, however, Phyllis was no match for Medicare. And when she explained her problems to me, she repeatedly used the phrase “No one told me.”

Fortunately, Phyllis’s efforts to properly enroll in and use Medicare have not had disastrous consequences — no financial or health care catastrophes. She got covered in time, seems to have avoided late-enrollment penalties and more or less got the coverage she wanted. But as she makes clear, these results are due primarily to her remaining healthy and needing to take a grand total of one prescription medication — an inexpensive blood pressure pill.

Phyllis’s employer did provide her notice of the impending end of her employer health coverage. But its statement did not explain the specifics of her existing coverage and the things she would need to replace with Medicare.

Phyllis never would assume what a legal client needed or how opposing lawyers might behave. But she, like too many other Medicare newcomers, did assume that Medicare was a relatively straightforward process.

READ MORE: I didn’t want Medicare Part B. Why did Social Security enroll me in it?

“I absolutely did” make that assumption, she recalls. “My assumption was that 30 days or so before I needed Medicare, I could go and apply,” and everything would be taken care of.

At the outset, she didn’t know she needed to contact Social Security and not Medicare to enroll in Medicare. She didn’t know about prescription drug coverage or that it was called Part D of Medicare. She didn’t even know that Medicare Advantage plans existed. And she didn’t know that her cellphone needed to have a full charge before calling Medicare for help, because her wait times often would be so long that her phone would run out of juice while she was still on hold!

No one told her. “I had Part A,” she said, because she already was receiving Social Security retirement benefits. “I thought all I needed was Part A. I thought I could get Part B automatically. I didn’t know I needed to apply to Social Security for Part B.”

Phyllis’s first phone call with the Social Security Administration began to make her see that 30 days was a laughably short time frame, even for someone as skilled as she in figuring out how things worked. Social Security, it turns out, does a lot of Medicare enrollment work and is the official Medicare traffic cop when it comes to determining if people have enrolled for various parts of Medicare on a timely basis.

Adding Part B, which covers doctors, outpatient and medical equipment expenses, along with Part A hospital insurance, would provide her with what’s called Original Medicare coverage. It also would qualify her to purchase other types of Medicare insurance, including a Part D drug plan and either a Medigap policy or a Medicare Advantage plan.

After waiting on hold for more than an hour, Phyllis was told by the Social Security Administration representative that she could apply for Part B online. She was uncomfortable with that, so the rep provided her detailed instructions about how to download and complete a Part B application form. This guidance included how she should address and mark the envelope to make sure it went to the right place. She did this weeks in advance of her employer coverage ending. After waiting and waiting for a response, she finally called the local office again, waited on hold for more than an hour a second time and was told no one at that office had ever seen her application form.

READ MORE: What Clinton and Trump propose for Social Security and Medicare

During the first of what became three trips to a Social Security office, Phyllis tried to sign up for Medicare. The office was located in a congested area, with street parking whose meters permitted no more than two hours of parking time. So Phyllis thought it would be prudent if she scheduled an appointment. The Social Security website provides information on how to do this, but she was told by someone in the local office that it did not do visits by appointment.

Being a walk-in, as she later learned, guaranteed long delays. And when she wanted to go refill her parking meter and avoid a possible parking ticket, she was told she would lose her place in line if she left the office. Phyllis found another Social Security office farther away, where parking was not a problem.

While she was signing up for Part B, no one told Phyllis about the need for Part D prescription drug coverage or even about the existence of Medicare Advantage plans, which are formally designated as Part C of Medicare. They have become an increasingly popular alternative to Original Medicare, and now are the choice of more than 30 percent of Medicare users. More than 40 million people have Part D drug plans. But the first that Phyllis learned about signing up for a Part D plan was shortly before being dinged with a late-enrollment penalty. Four months after signing up, she had still not seen any evidence that she actually had a Part D plan and acknowledged that penalties might still be possible.

Phyllis wound up with Original Medicare, the hoped-for Part D plan and a Medigap policy. This is one of two classic paths into Medicare. The other involves a Medicare Advantage plan, usually bundled with Part D drug coverage. She later admitted she chose her Medigap insurer because it was the only company that answered the phone when she called.

READ MORE: How to avoid Medicare enrollment panic

“All my assumptions were wrong,” she says. Although her coverage didn’t begin until August 2015, Phyllis quickly realized she might have made key mistakes and began a new round of research to get ready for Medicare’s annual open enrollment period, which runs each year from Oct. 15 to Dec. 7.

Open enrollment is the annual equivalent of a Medicare do‑over. It permits people to choose new plans, usually with no adverse coverage or pricing consequences. It’s a great deal, but like
much else about Medicare, people often don’t understand how it works.

No one told them.

Published by arrangement with Simon & Schuster Inc. Copyright © 2016 by Philip Moeller.