Many Layers Of Rules Lead To Medicare Confusion

I recently did a webinar on Medicare basics for over 600 consumers. During the Q&A session, I realized why Medicare is so confusing. The first question I was asked, “When are the seven months I have to enroll in Medicare?” highlights the reason.

You would think there should be one enrollment period for everyone, right? There was back when Medicare started. By 1966, one year after Medicare became official, 19 million people had enrolled. (Just a comment about that. Even with all the computers and automation, could you imagine the scene in today’s world if Social Security had to process 19 million applications in 12 months or 52,000 a day?)

Life was no doubt simpler in the 1960s. Those turning 65 were either retiring or already retired and qualified for full Social Security benefits. There was one Medicare for everyone. But then life started getting complicated. People were living longer and retiring later. Medicare started interacting with all kinds of different situations – COBRA, retiree plans, SSDI, Medicare Advantage, Part D drug plans – with all kinds of different rules and policies, each one layered upon those that came before.

The IEP and Layers of Confusion

Back to the question. The Initial Enrollment Period is a seven-month period during which those turning 65 can decide what to do about Medicare. When this period starts and ends depends on one’s date of birth. Consider the example of two twins. One is born at 11:55 PM on October 1 and the second at 12:05 AM on October 2. Only ten minutes separate their births but they will have two different IEPs.

For the second twin and everyone born on any day of the month, except the first, the IEP begins three months before and ends three months after the birth month. Enroll during the first three months and Medicare begins the first day of the birth month. Enroll during the last four months and coverage starts the first day of the next month.

Medicare treats those born on the first day of the month as if they were born the last day of the previous month. The IEP starts four months before and ends two months after the birth month. Enroll during the first three months and Medicare takes effect the month before the birth month. Sign up during the last four months and Medicare begins the next month.

In my example, the IEP for the first-born twin would be June 1-December 30 and, for the second twin, July 1-January 31. These twins may be identical in every respect, except for Medicare.

More Enrollment Period Layers

Now, if these twins decide to continue working and delay Medicare enrollment, they will confront another layer, with different rules: the Part B Special Enrollment Period. This SEP gives those retiring past age 65 an opportunity to enroll in Medicare without delay or penalty. It is an eight-month period that begins with the end of coverage or employment, whichever comes first.

If, for whatever reason, the twins miss their IEP or Part B SEP, they would face another layer, the General Enrollment Period. This is a three-month period from January 1-March 31 every year. Medicare takes effect the first of the month after enrolling and there can be late enrollment penalties.

Besides these three periods for signing up for Medicare Part A and/or Part B, there are dozens of other enrollment periods. There are three open enrollment periods: Open Enrollment (October 15-December 7), Medicare Advantage Open Enrollment (January 1-March 31), and Medigap Open Enrollment (six months beginning when a person is 65 or older and enrolled in Part B). Then, Medicare.gov addresses over 30 special enrollment situations, along with more enrollment periods for all kinds of situations.

I could go on but you get the idea. Medicare involves layer upon layer of rules, policies and procedures, leading to confusion. If you are trying to figure out what to do in a particular situation, remember to cut through the layers to get to the one that works for you. Then, you can take a break and enjoy a slice of seven-layer cake.