1. I’ve heard that I may need to have creditable coverage to get a Medicare plan without paying a penalty. What does that mean?
You may have heard the term “creditable coverage” used with both Medigap and Medicare. Creditable coverage under Medigap is slightly different than creditable coverage under Medicare. If you have creditable coverage under Medigap, that means that you have had coverage on a pre-existing condition for more than six months. If you’re looking for a different Medigap plan to supplement your original Medicare, as long as you find another Medigap plan within 63 days, you do not have to wait for that Medigap plan to cover your pre-existing condition.
Under Medicare, if you have creditable coverage, that means that the coverage you have is as good as or better than that offered under Medicare Part D. All Medicare Advantage plans that offer Part D prescription drug coverage are required by law to provide creditable coverage. If you are not in a Medicare Advantage plan, you may not have creditable coverage and may want to move into a Medicare Advantage plan.
Having creditable coverage can be important, especially if you’re already in a Medicare Advantage plan or are moving from employer coverage to Medicare coverage. If you go for longer than 63 days without creditable coverage and choose to enroll in a Medicare Advantage plan, you may be required to pay a 1% penalty on your premiums for every month you didn’t have creditable coverage. This penalty generally is applicable for as long as you use Medicare Advantage coverage.
2. How do I know if I have creditable coverage?
Medicare plans are required to send their members a letter every year confirming that their coverage is creditable. If you’re in a plan offered by an employer, your employer may also send you a letter. Most employer coverage is creditable, so if you’re eligible for Medicare and in an employer plan, your coverage is likely creditable.
3. What if I’m not enrolled in Medicare Advantage or an employer plan?
If you’re not enrolled in a Medicare or employer plan, you should check with your plan administrator to find out if your coverage is creditable. Generally plans that provide coverage to people with Medicare are required to let them know if their coverage is creditable or not.
4. I’m new to Medicare and haven’t had insurance. Does that mean I have to pay a penalty if I sign up for a Medicare Advantage plan?
No. If you sign up for a Medicare Advantage plan or original Medicare with Parts A and B when you are first eligible, the coverage you have will be considered creditable and you should not have to pay a penalty to join a Medicare Advantage plan.