You may not be aware, but everyone is eligible for Medicare at age 65, even when the normal retirement age for Social Security benefits is later. We recommend anyone turning age 65 contact the Social Security Administration (www.ssa.gov or 1.800.772.1213) three months before the month of their 65th birthday.
There is also a free Medicare informational booklet available through this site. The initial Medicare enrollment period runs for seven months, starting three months before the month you turn 65. If you do not enroll during that time, it may end up costing you money.
If you don’t sign up during this initial seven month enrollment period, you may not be able to sign up for Medicare Part B coverage, which covers outpatient care, until the next Open Enrollment Period. These enrollment periods generally run from January 1 to March 31 each year, for coverage to begin July 1. Besides the possibility of an additional wait for benefits, if you missed your initial enrollment period, you will incur a 10% premium penalty for each year you wait beyond your initial enrollment period – and the penalty will continue as long as you have Part B.
There is another penalty on the Medicare Part D drug plan if you miss the initial enrollment period, and this penalty accrues monthly. However, if you can show you had drug coverage elsewhere that is as good or better, you may avoid the late fee. If you miss your initial enrollment period for Part D, you will have to wait to enroll during the Open Enrollment Period, which is from October 15 to December 7 for coverage beginning January 1.
If you are still working at age 65, you will need to figure out how Medicare works with your workplace or retiree coverage and learn where there may be gaps in coverage. If you are still working, you may qualify for a Special Enrollment Period (SEP) that exempts you from the penalties of late enrollment. To qualify for the SEP, you must enroll in Medicare Part B while you are covered by a group plan through your employer or as a dependent under your spouse’s employer plan. One other option is to file during an eight-month special enrollment period beginning the month your employment ends or the month your group coverage ends, whichever comes first.
Medigap is an optional, supplemental insurance plan you can purchase to help pay for some of the health costs Medicare doesn’t cover. The best time to buy a Medigap policy is during your Medigap open enrollment period, which lasts for six months and begins on the first day of the month in which you are 65 or older and enrolled in Medicare Part B.
During this period, you can buy a Medigap policy without fear of being turned down or charged more because of a past or present health problem. After this six-month period, you may be denied coverage or charged more due to a pre-existing condition, which makes this period very important for many. If you join a Medicare Advantage plan, also called Medicare Part C, you don’t need and cannot be sold a Medigap policy.
There are many more rules surrounding applications and eligibility for Medicare and the different plans available, and this is not meant to be a complete guide. We do, however, want to remind you and your loved ones how important it is to check into the benefits available and the rules for applying prior to a 65th birthday. Visit the government’s Medicare website at www.medicare.gov for the best information. There is a helpful tip sheet at http://www.medicare.gov/publications/pubs/pdf/11219.pdf.
For useful information on other financial planning topics, and observations on the market and the economy, please tune in to my weekly radio program, Your Green, aired Saturdays at 3:00 PM on 970 AM or live at http://www.faithtalk970.com. Visit our website at http://www.rogersgreen.com for additional helpful information. As always, we are here to help.
Roger S. Green is a registered Representative with Cetera Advisors LLC, member FINRA/SIPC, with Green Financial Resources, LLC located at 3700 Crestwood Parkway, Duluth, GA 30096. Neither Green Financial nor Gwinnett Technical College is affiliated with Cetera Advisors LLC. Hear more “Your Green”, Saturdays at 3PM, on WNIV 970 AM or live at http://www.faithtalk970.com. Visit Roger’s website at http://www.rogersgreen.com.