How COVID-19 Impacts Medicare Coverage

The outbreak of COVID-19 has created uncertainty across the nation and world over the last several months. The global health concerns surrounding the novel coronavirus have prompted Medicare recipients to wonder how it will impact their coverage. Many people with Medicare are in the higher risk category for COVID-19, so it’s important to take all precautionary measures provided by the Centers for Disease Control (CDC) such as washing your hands and practicing social distancing.

The Centers for Medicare & Medicaid Services (CMS) have taken steps to ensure Medicare recipients are receiving the health coverage they need during this time. Many plan costs and provisions have been temporary modified due to COVID-19, such as:

  • There are no copayments for COVID-19 testing.
  • Part D prescription drug refill limits have been waived.
  • Reimbursements are available for Part D out-of-network prescriptions.
  • Prior authorization has been waived for Part D drugs used to treat COVID-19.
  • Telehealth services have been expanded to prevent the need to visit doctor’s offices or hospitals.
  • If a vaccine is developed in the future, it will be covered by Medicare.

Additionally, many Americans have lost their jobs due to the economic downturn and have subsequently lost their health coverage as well. They now may need to enroll in Medicare. The Medicare enrollment process can be complicated as-is; adding a global pandemic on top only makes matters more stressful.

We’ve had several conversations on this topic, so we’ve put together a list of these commonly asked questions about Medicare coverage and answers to each. Hopefully this brief guide will help explain your options and the steps you need to take to ensure you have the proper Medicare coverage.

I’m over 65 years old and have been covered by my employer’s group health plan, but my employment has now been terminated. Do I need to enroll in Medicare?

Yes, if you are over the age of 65 and either your employment or your group heath coverage has ended, you will need to enroll in Medicare. You are eligible for a Special Enrollment Period (SEP), which provides an 8-month window to enroll in Medicare Part A & B, sign up for additional Part B supplemental coverage & Part D prescription drug plans, or a Medicare Advantage plan (Part C). Failure to enroll within the SEP may result in permanent penalties in the future.

I’m over 65 years old, have lost my job, and now need to enroll in Medicare. What health coverage options do I have for my spouse if he/she is not yet eligible for Medicare? Can I get medical coverage for my dependent children?

If you’ve lost your job and group health coverage, your spouse and/or dependents may be eligible for health benefits through COBRA. There are special provisions that provide extended COBRA coverage when the working spouse loses their group health benefits and must enroll in Medicare. COBRA coverage can be extended for up to 29-36 months beyond the typical 18-month period. You will have to pay the full cost of the plan plus a 2% COBRA administration fee.

You can also consider standalone medical insurance policies. However, these plans can be expensive, and the health coverage may not be as robust as the coverage offered through COBRA.

How do I apply for Medicare benefits?

Due to COVID-19, all Social Security offices are closed so you cannot apply in-person. If you have not enrolled in any part of Medicare before, you can enroll online or contact Social Security to enroll via a phone appointment. If you enroll online, be sure to print your application number toward the end of your enrollment. You will need this number to check the status of your application online.

If you previously enrolled in Medicare Part A only (hospital coverage), you cannot complete the Part B enrollment online. Thus, you will need to complete the following two forms and mail/fax them to your local Social Security office:

Once your Part B application is complete and you receive your Medicare card number, you can then enroll in a Part B supplement plan (aka Medigap) & Part D prescription drug plan, or a Medicare Advantage plan (Part C).

If I enroll in Medicare, will I need a supplement plan and prescription drug coverage?

Yes, we always recommend clients who are enrolling in Medicare get additional Part B supplemental coverage and Part D prescription drug plans. You can also consider a Medicare Advantage plan (Part C), which is bundling of the supplement & drug plans.

Medicare’s standard coverage pays for approximately 80% of medical expenses, and recipients are responsible for the other 20%. Thus, it’s critical to get this additional coverage to reduce your out-of-pocket medical expenses in the future.

How much will my Medicare coverage cost?

Medicare Part B has a standard monthly premium. For 2020, the cost is $144.60/month per recipient. Part B supplements, Medicare Advantage plans, and Part D drug plan premiums are in addition to the standard monthly premium.

Additionally, these Part B premiums are means tested – also known as the “Income Related Monthly Adjusted Amount” (IRMAA). The higher your Modified Adjusted Gross Income (MAGI), the more you will pay for this standard coverage. Medicare does a two-year look-back on your income taxes to determine your premium costs for the current year. For example, 2020 premiums are based upon your 2018 MAGI. Here is a breakdown of the IRMAA costs for 2020.

If you recently lost your job and may now be facing increased Part B premiums due to your 2018 income, you can petition Medicare to have your premiums reduced due to a loss of employment and/or retirement. By filing the “Life Changing Event” form (Form SSA-4A), you can request that they reconsider how your income has changed due to “work stoppage.” Using your previous tax return to set current premiums may no longer accurately reflect your income in the future.

We have all been faced with new challenges as a result of COVID-19. However, it can be especially concerning when it impacts your health and medical coverage. Our hope is this guide can help clear up some of those concerns regarding Medicare coverage.

If you have additional questions about this or any other impact to your overall financial plan, please contact us today.

Will Goodson

Will is a senior advisor who designs financial plans and investment strategies for clients. He is a University of Texas graduate and a CERTIFIED FINANCIAL PLANNER™ professional. Additionally, Will has obtained the National Social Security Advisor (NSSA®) designation and works closely with wealth management clients to determine the most optimal strategies for taking Social Security and Medicare.

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