For individuals approaching Medicare age, it is important to know that there are two main enrollment periods to sign up for Medicare: initial enrollment (at age 65) and special enrollment. Missing these enrollment periods could be detrimental to you by resulting in gaps in health insurance coverage and costly penalties.
The first opportunity to sign up for Medicare — at age 65 — is known as the Initial Enrollment Period (IEP). The enrollment period for those signing up at age 65 is the 3 months preceding your 65th birthday, the month of your 65th birthday and 3 months after your 65th birthday. To initiate Medicare coverage at the beginning of the month of your 65th birthday, you need to enroll within the 3 months prior to the month of your 65th birthday. If you sign up during the month of your birthday, your coverage will not begin until the first day of the following month. The chart below illustrates coverage starting dates if you sign up during the three months after the month of your birthday:
Employee Retiree Coverage
While it is important that you do not have any gaps in your coverage when you turn 65, it is equally important to know if you need to sign up for Medicare at age 65. If you have employer retiree coverage (including COBRA coverage), individual coverage or coverage through an employer of fewer than 20 employees, then you will need to act during your IEP. (To help you determine if you need to act during your IEP, read our blog, “Your ‘When I’m 64’ To-Do Item: Consider Medicare Options.”
If you miss your Initial Enrollment Period
If you do miss your initial enrollment period for reasons other than a qualified event such as your current employer providing insurance, it is important to understand your options and the consequences for missing it. For those who miss their IEP, there is a late enrollment penalty on your Medicare Part B premium as well as your Medicare part D premium.
For Medicare Part B, the penalty is 10% of your monthly premium for every full year that your enrollment is delayed past your initial enrollment period. In 2019, a $13.55 penalty will be added to your monthly premium. In addition to the penalty, there may be considerable delay before you will have insurance coverage through Medicare, because you will have to wait until the next General Enrollment period, which is January 1st through March 31st every year. For those who sign up for Medicare during the General Enrollment period, their coverage does not go into effect until July 1st of the year they sign up. In some circumstances this could mean a 65-year old is without insurance coverage for up to a year and a half.
Below is example of how the penalty and coverage gap works:
George Jones turned 65 in January 2017. He took off on a world cruise and Medicare slipped his mind. He realized his mistake later that year. He had to wait until the General Enrollment Period in January 2018, and his Medicare coverage took effect the following July. Because he was a full two years late in enrolling, he pays an additional amount every month for Part B. In 2019, that’s $27.10 plus the $135.50 standard Part B premium.
For Medicare Part D, the penalty is 1% of the standard Part D premium in effect for that year for every month the individual was without prescription drug coverage. For 2019, the penalty is $0.33 for every month without coverage.
Both of the penalties follow you for life and will change every year based on the part B and part D premium of the individual.
The second opportunity you have to sign up for Medicare is known as the Special Enrollment Period (SEP). While there are multiple reasons one may qualify for a SEP, a common occurrence for those over age 65 is the loss of employer or a spouse’s employer health insurance coverage due to retirement or severance/separation. As long as you have no significant gaps in insurance coverage after age 65 and worked for an employer of 20 or more employees, they should qualify for a SEP. The SEP gives you eight months after the termination of their previous insurance coverage to sign up for Medicare without penalty. To ensure there is no coverage gap between the end of previous insurance coverage and Medicare, you should begin the process of enrolling in Medicare two-to-three months before their insurance coverage ends. If the eight-month period ends and you have not signed up for Medicare during the SEP the individual will be subject to similar penalties as those who missed their initial enrollment period.
How to enroll?
When you are ready to enroll for Medicare you have three options to enroll. (Please note that if you are collecting Social Security at age 65 that you will be automatically enrolled in Medicare part A):
- Enroll online at socialsecurity.gov/medicareonly. It is recommended that you review the following publication before enrolling online. ( https://www.ssa.gov/pubs/EN-05-10531.pdf)
- Call Social Security at (800) 772-1213 between 7am and 7pm on Monday through Friday. Please be prepared for extended wait periods before you are able to talk to a person. They may recommend that you schedule a telephone appointment with your local Social Security office. Record the names of the people you speak with and the date/time of your conversation.
- Visit your local Social Security office. Use the following link to find a Social Security office near you: https://secure.ssa.gov/ICON/main.jsp. To reduce wait time, it is recommended that you call (800) 772-1213 to schedule an in-person appointment.
In summary, there are a lot of considerations when deciding when and how to enroll in Medicare. It is important to know your resources and establish a plan so that you do not miss any of the critical dates and components of Medicare. Please reach out to your RegentAtlantic Wealth Advisor to start a conversation about Medicare.
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