Don't Sleep on Medicare

Bob Stowe |

For those already receiving their Social Security benefits, they will automatically be enrolled in Medicare Part A and B when they reach Medicare age. Conversely, the individuals who have not yet claimed their Social Security benefit when they become Medicare eligible at their age 65 will not be automatically enrolled.  If you are approaching age 65, you need to be informed of the Medicare sign-up rules to avoid late enrollment penalties. Failing to comply can be costly to your retirement plan.

Medicare can be confusing with all the different parts: Medicare Part A, hospital insurance coverage, Part B, physician and outpatient coverage, and Part D, prescription drug coverage (plus there are Medicare Advantage plans, or Part C, that offer Parts A & B with multiple variations on costs/coverages/restrictions).

The first enrollment period for Part A, B and D is three months prior to your 65th birthday and ends three months after turning 65. Unless you are covered by an employer health insurance plan, you must enroll in Part B and D within the first enrollment period or your premium amount will be permanently increased for the rest of your life.  Enrolling after the first enrollment period causes a Part B premium increase of 10% per year for each 12-month period you wait to enroll past age 65, and 1% per month or up to 12% per year premium increase for Part D (note – Part A has no premium increases as the benefit is free to all who qualify). The general enrollment period is from January 1st to March 31st and coverage starts on July 1st for those that enroll that year. The delay in Medicare coverage could force you to purchase expensive private health insurance for a short period.

Even if you do not need Medicare when you turn 65 because you own health insurance through your employer or you elected COBRA continuation coverage when you retired, you must enroll in Medicare within 8 months after your employment ends or the Part B and D premium increases mentioned above will occur. A misconception is that you do not need to apply for Medicare until your prior employer’s health insurance ends, but the 8 month deadline starts at your separation of service not when your insurance coverage stops. There is no reason to delay enrolling as there is nothing wrong with having both Medicare and your COBRA coverage active at the same time (in fact most plan’s require it).

Individuals approaching age 65 should enroll in Medicare either during the first enrollment period or soon after you retire (if post-age 65) and be aware of how Medicare coverage coordinates with your existing health insurance coverage.