The rules for enrolling in Medicare are complex enough; but if you postpone retirement past age 65 – you could get caught in a sea of bureaucratic red tape.
Face it, we’re all feeling younger and living longer than many ever imagined – just take a look at the black and white photographs of your grandparents and great-grandparents. Even when they were in their 30’s and 40’s they looked old. You don’t. Yet, whether you’re a gym rat, fitness freak, or workaholic, you still must register for Medicare benefits at age 65 – or else.
If you’re like many sextogenarians, you’re not ready to settle into the rocking chair, grab a tall glass of lemonade and watch the grass grow. You may want to continue to work; and from our vantage point. You likely won’t HAVE TO, you will WANT TO.
What’s the Risk of Not Applying for Medicare?
Medicare has a strict enrollment deadline. You could face a fine and risk going without Medicare coverage for months if you don’t apply for benefits on time.
Now, if you already collect Social Security, enrollment is automatic. Yet, if you elect to continue working beyond age 65 and instead stay with your employer’s group health plan, your options for getting Medicare can be sharply limited.
The Wall Street Journal recently reported that “a growing number of older adults are getting ensnared in the program’s complex rules, as more seniors return to work or put off leaving their jobs”. Some workers postpone enrolling in Medicare because their health coverage on the job can be less expensive. Even though Medicare Part A, which covers hospitalization, is free for most people 65 and older, Medicare Part B, which covers doctor visits and other forms of outpatient care, charges a monthly premium of between $96.40 and $353.60, depending on a beneficiary’s income.
In addition, many people choose to purchase private “supplement” policies, which pay for expenses Medicare doesn’t cover, and so-called Part D prescription-drug plans. Others choose to receive benefits through private Medicare Advantage plans, which generally charge premiums, copayments and deductibles.
But it’s important to do some homework before deciding to stick with an employer’s plan alone. Those who are employed can switch at any time from a group health plan to Medicare. But once an employee stops working – voluntarily or not – he or she has only eight months to sign up for Medicare Part B. Those who miss this window – called a special enrollment period – must wait for Medicare’s general enrollment period, from Jan 1 to March 31 to sign up. Worse, their Part B benefits won’t go into effect until the following July, and late-enrollment penalties may apply.
If you plan to delay signing up for Medicare, experts recommend keeping good files about your decision and copious notes from phone conversations with officials you contact for advice, including employees at Medicare and the Social Security Administration. Those notes can be used when asking Social Security for “equitable relief” which is a legal protection that allows for immediate enrollment in Medicare Part B without penalty.
Source: Wall Street Journal, December 30, 2009
Marc Freedman, CFP®
President/CEO
Freedman Financial
Peabody, MA
