Here’s what you need to know about Medicare if you are receiving Social Security disability benefits
As of December 2011 there were 8,576,000 disabled workers receiving Social Security disability benefits. The average benefit amount was $1,110.50 per month.
Although this safety net is surely appreciated by those receiving benefits, the amount is hardly enough for those who are unable to work. Couple that with a lack of medical insurance and you have a real problem.
Social Security disability recipients become Medicare eligible after they have received 24 months or benefits. For many, the wait is is slow downward slide into financial ruin. And once eligible for Medicare, there are a host of other issues to contend with that in some instances, seem like being under 65 and on Medicare qualifies you as a second class citizen.
This article will address your options related to becoming eligible for Medicare and your options related to supplemental plans.
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Becoming eligible for Medicare when you are under 65
If you are entitled to Social Security disability benefits and have been receiving benefits for 24 months, you will be eligible for Medicare Parts A and B on the first day of your 25th month. Your enrollment is automatic. You do not have to complete an application or otherwise signal your desire to be enrolled in the Medicare program.
Your Medicare card will be mailed to you 3 months before your 25th month. You will automatically be enrolled in both Parts A and B. You can refuse Part B, but you should consider the consequences carefully. If you refuse Part B, you may save some money on monthly premiums but you:
- Will not be covered for outpatient services like testing and doctor visits
- May have to pay a 10% surcharge on Part B premiums if you enroll later but prior to turning 65
- Will not be able to enroll in a Medicare Advantage plan or buy a supplement (if available)
Should you cancel Part B you will automatically be re-enrolled when you turn 65 and will not be subject to a surcharge. You may decline Part B at that time and may qualify for a Special Enrollment Period later on.
Medicare Advantage, Part D and Medigap insurance for people receiving Social Security disability
Once you are enrolled in Parts A and B you can join a Medicare Advantage plan. Advantage plans are another way to receive your Medicare benefits that generally affords you fixed copayments and coinsurance amounts for medical services. Many people choose this option to avoid Part A hospital deductibles and the 20% coinsurance required for all Part B services.
You can also enroll in a Part D plan as well. Keep in mind that many Medicare Advantage plans include Part D drug benefits. Joining a Part D plan or Medicare Advantage plan is as seamless as though you were 65. Your premiums will be the same and if a plan is available in your service area, you are able to submit an application. This is not necessarily the case with a Medicare supplement (aka Medigap insurance policy).
The rules for Medigap insurance are different than the rules for Part D and Medicare Advantage plans. It is determined by each State whether or not insurance companies must offer Medigap to beneficiaries under 65. Depending on your State of residency, you may or may not be able to purchase a Medigap policy. Some states will allow you to buy a policy but you may be limited to a specific plan or plans.
If you have the option to purchase a policy, expect to pay considerably more than someone who is Medicare eligible due to turning 65. Sometimes premiums may be up to 2 1/2 times the premium for someone 65 years old. The bottom line is insurance companies who sell Medigap policies would rather not have you as a client if you are on Medicare due to a disability. Their claims experience will be higher and you will statistically be likely to cost them more money.
If you are on Medicare due to a disability you may be better off enrolling in a Medicare Advantage plan. It’s an individual choice (if you have a choice at all!) but given the high premiums
and the often lower incomes of someone on Social Security disability it often makes sense to go that way.