Dave Ramsey warns Americans on critical Medicare problem

As Americans near retirement age and begin to prepare for the lifestyle change with a strong sense of urgency, many are focused on two essential goals that often rise above others.

One involves the hope that, between retirement savings and Social Security monthly payments, they will have the finances necessary to live the lifestyle they imagined when their working years are behind them.

The other is that their health care needs are covered. And that means learning about and understanding Medicare, the federal program in which they are eligible to enroll when they turn 65.

Personal finance bestselling author and radio host Dave Ramsey reminds older Americans that Medicare's Annual Enrollment Period begins Oct. 15 and runs through Dec. 7.

Importantly, there are other key dates and tasks for people to understand and complete to get a good plan — and to avoid penalties that can affect them for the rest of their lives. 

Dave Ramsey warns about Medicare enrollment timing

Ramsey addresses his remarks directly to individuals who are looking seriously at their Medicare options and want to make the smartest decisions possible for their health and financial well-being.

"The rules, options and dates around Medicare are crazy," Ramsey wrote. "Especially enrollment. But it’s important to know this stuff." 

"Seriously, understanding and getting enrollment right is super important because if you get it wrong, you could end up paying penalties the rest of your life," he added. "Yeah, the stakes are that high. So we’re going to do our best to make it simple."

The most important thing to know about Medicare is that timing matters, Ramsey emphasizes. Signing up late can lead to permanent financial penalties. 

That’s why knowing when and how to enroll is essential.

Dave Ramsey outlines enrollment periods

The first and best opportunity to enroll is during the Initial Enrollment Period (IEP), Ramsey explains. 

This seven-month window begins three months before the month one turns 65, includes one's birthday month, and continues for three months after.

Second, a Special Enrollment Period (SEP) exists for people who miss their IEP due to some predefined circumstances, such as losing employer-sponsored insurance, moving back to the U.S. after living abroad, or having coverage that’s no longer considered “creditable ”— meaning it doesn’t meet Medicare’s standards.

SEPs are designed to give people a chance to enroll without penalty when their coverage changes unexpectedly.

If one misses both their IEP and any SEP, they still have one more chance to enroll.

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"If you missed your IEP or SEP, maybe you should deal with your procrastination problem. Kidding. Mostly," Ramsey wrote. "But seriously — you can still get Medicare."

The General Enrollment Period (GEP) runs from Jan. 1 to March 31 each year. One can sign up for Original Medicare during this time, and the opportunity also exists to add drug coverage or a Medicare Advantage Plan.

"Heads up though," Ramsey cautioned. "Using the GEP to enroll usually comes with a penalty in the form of higher premiums — and they last for the rest of your life."

Ramsey clarifies a Medicare Open Enrollment key point

Often used interchangeably with the term Medicare Open Enrollment, the Annual Enrollment Period (AEP) runs from Oct. 15 to Dec. 7. But Ramsey makes an important distinction.

"The name sounds awfully similar to regular health insurance’s open enrollment period, when anyone can sign up for health insurance — but this is not (repeat not) a time for you to sign up for Medicare for the first time," Ramsey clarifies. "It’s a time for folks who already have Medicare to make changes to their existing plan or switch plans."

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Ramsey points out that this is a good time to evaluate one's coverage and make sure it still fits their needs, especially since plans can change from year to year.

If a person is unhappy with their Medicare Advantage Plan — for example, if they are tired of dealing with in-network restrictions — the AEP offers the chance to switch back to Original Medicare. 

It is also the time to update drug coverage if prescriptions have changed or one's current plan no longer offers the best value.

Medicare enrollment periods

• Initial Enrollment Period (IEP): Occurs three months before a person’s 65th birthday month, includes that month, and ends three months after. It is for enrolling in Medicare for hospital and medical coverage, and optionally drug or private plan coverage.
• Annual Enrollment Period (AEP): Occurs Oct. 15 to Dec. 7 each year. It is for people already enrolled in Medicare to make changes to their coverage or switch plans.
• Special Enrollment Period (SEP): Occurs when a person loses other qualifying health insurance or experiences specific life changes. It is for enrolling in Medicare outside the IEP without penalty due to special circumstances.
• General Enrollment Period (GEP): Occurs January 1 to March 31 each year. It is for enrolling in Medicare if one missed the IEP or SEP, though it often results in a permanent late enrollment penalty.

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