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One bad side effect of losing your job can be the end of employer-subsidized health insurance.
For anyone in the 65-and-older crowd who is now unemployed (or had coverage through a now-unemployed spouse), that’s when Medicare can step in. While some in that cohort may already have signed up for the program when first eligible at age 65, others may have delayed fully enrolling because they had qualifying coverage elsewhere.
That age group now has a 15.6% unemployment rate due to coronavirus-related job losses, according to the Kaiser Family Foundation. That’s second only to the 27.4% jobless rate among the nation’s youngest workers (ages+ 16 to 24).
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While keeping your employer-based health insurance under a federal law known as COBRA may be possible, it also could be a more expensive proposition. For one, you’d have to pay the full premiums instead of your employer footing some or much of those monthly amounts.
Also, COBRA coverage does not count as qualifying insurance in place of Medicare. And if you miss certain deadlines for enrolling in Medicare without having acceptable coverage, you could pay life-lasting penalties.
Of course, Medicare is not free. Yet if you find yourself now without employer-based insurance, it may be the best option. And, there are ways to reduce your costs if your income has dropped significantly.
Also, if Covid-19 interfered with a person’s ability to sign up for Medicare when they were supposed to — for example, they missed their initial enrollment period — there’s now a special window for signing up.
“They can enroll through the end of June instead of having to wait until general enrollment,” said Elizabeth Gavino, founder of Lewin & Gavino in New York and an independent broker and general agent for Medicare plans.
Here’s what else to know.
The cost
As long as you have at least a 10-year work history, you pay no premiums for Medicare Part A, which covers hospital stays, skilled nursing, hospice and some home health services.
However, Part A has a deductible of $1,408 per benefit period, along with some caps on benefits.
Part B — which covers outpatient care and medical supplies — has a standard monthly premium of $144.60 this year, although higher earners pay more (see chart below). It also comes with a $198 deductible (for 2020). After it’s met, you typically pay 20% of covered services. You get eight months to sign up for Part B once you lose workplace coverage.
Parts A and B generally don’t cover prescriptions. That’s where a Part D drug plan comes in.
You can get a standalone plan to use alongside original Medicare. Or, you can sign up for an Advantage Plan (Part C), which are offered by private insurance companies and typically include prescription drug coverage. If you go this route, your Parts A and B benefits will be delivered via the insurer offering the plan (which may or may not have a premium).
The average cost for Part D coverage in 2020 is about $42 per month, although high earners pay extra for their premiums (see chart below). The maximum deductible for Part D this year is $435.
If you already have Part A and are signing up for Part B because of a job loss, there’s a form for you and your ex-employer should fill out. This basically is to avoid late-enrollment penalties by ensuring that you had qualifying coverage during the period of time you were eligible for Part B but were not enrolled.
Coverage gaps
Be sure to think about how you’ll pay for the things Medicare excludes. For instance, it generally doesn’t cover dental work and routine vision or hearing care. Same goes for long-term care, cosmetic procedures and medical care overseas.
Many people decide to pair original Medicare with a supplemental policy — a.k.a. Medigap — to help cover out-of-pocket costs such as deductibles and coinsurance. You cannot, however, pair a Medigap policy with an Advantage Plan.
If you end up choosing an Advantage Plan, there’s a good chance limited coverage for dental and vision will be included.
For long-term care coverage, some people consider purchasing insurance specifically designed to cover those expenses.