As people approach retirement, they begin to think about health insurance and the need to sign up for Medicare. There are important deadlines you don’t want to miss or this government insurance program will cost you more.
At age 65, most Americans are eligible to sign up for the government’s Medicare health insurance program. However, to get the best pricing, you need to complete the application process within the appropriate enrollment period. If you don’t, your coverage may cost more than it needs to for the rest of your life.
You become eligible for Medicare at age 65. Part A is referred to as hospital insurance and is generally provided at no cost. Medicare Part B is the coverage that pays for physician and other care similar to private health insurance coverage. Everyone pays a monthly premium for Part B and it ranges from $104.90 to $335.70, depending on the income reported on your last filed tax return.
Initial Enrollment Period
Your Initial Enrollment period is a seven-month period beginning three months before your 65th birthday month and ending three months after. For example, if your birthday is in October, your Initial Enrollment period starts July 1 and ends January 31. If you sign up during the 3 months prior to your birthday month, Medicare will commence at your age 65. If you sign up during your birthday month or the three months following, Medicare will start one to three months after your sign-up date.
If you are already receiving Social Security benefits by the time you reach age 65, Medicare will notify you regarding your enrollment two months before your Medicare coverage starts. In this case, you will be automatically enrolled for Part A and B.
Late Sign-up Penalty
If you do not sign up during your Initial Enrollment period, you will pay more for your Medicare coverage. The penalty for late enrollment is a 10% increase in Part B premiums for each 12-month period that you were eligible, but did not enroll. This penalty will apply for as long as you have Medicare coverage.
To obtain Medicare coverage after your Initial Enrollment period, you will have to wait to sign up during General Enrollment which occurs January 1 through March 31 each year. Your Medicare coverage will start in July, but due to the penalty, your cost will be higher.
Exception: Special Enrollment Period You can avoid the late sign-up penalty if you or your spouse is actively employed and you are covered under the employer’s group health plan. If this is the case, you have a Special Enrollment period to sign up for Medicare when employment ceases or the group health coverage ends, whichever occurs first. This Special Enrollment period lasts for eight months.
CAUTION: It’s important to note that COBRA and retiree health plans are not considered coverage based on current employment. Therefore, if retiree health coverage terminates or when COBRA runs out and you are outside of your Initial or Special Enrollment period, you will be required to pay a higher premium to participate in the Medicare coverage.
Medicare Supplement Insurance
Medicare supplement insurance, also known as Medigap insurance, is sold by a private insurance company and is used to pay medical expenses not covered by Medicare.
You can purchase a Medicare supplement policy without being subject to medical underwriting if done within the six month period after you turn 65 and have enrolled in Medicare Part B or six months after enrolling for Medicare during a Special Enrollment period. This means that even if you have a health problem, your premium cost will be the same as that charged to a person with a good health rating. Purchasing a Medicare supplement policy outside of the six month period will subject you to medical underwriting and potentially higher premiums.
Summary
As people anticipate retirement, one of their biggest concerns is medical insurance and the cost of healthcare. To ensure that you receive the best possible pricing for both Medicare Part B and Medicare supplement insurance, you need to be aware of your enrollment period. For more information, visit www.Medicare.gov.