Avoid Penalties in Retirement by Signing up for Medicare Part B at 65

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If you are getting closer to retiring or are already 65, you need to seriously think about enrolling in Medicare as soon as you can. Although you may have reasons why you want to wait, after reading this article you may discover that it is not a good idea.

Medicare insurance has several parts to it. Medicare Part B provides coverage for services such as doctor visits, hospitalization, ambulance services, durable medical equipment, prescription drugs, and some mental health services. It may also cover some preventive services.

Qualifications for Medicare

There really is no reason to not get Medicare Part A if you meet the basic qualifications. Centers for Medicare & Medicaid Services (CMS) says it is free to people 65 or older, who are a U.S. resident and a citizen. Aliens must have permission for permanent residence—and who has lived in the United States continuously for five years before applying for Medicare.

The Penalties for Buying Medicare Part A Late

Putting off signing up for Medicare Part A when you turn 65 unless you have similar coverage from your employer will cost you. Medicare says that the penalty is more than just a one-time thing.

If you must pay for Part A, you must add 10 percent of the premium for twice the amount of time you did not sign up. If you waited an extra year to sign up, you must pay 10 percent more of the premium—each month for two years—and possibly more depending on your salary.

The Penalties for Buying Medicare Part B Late

If you could have obtained Medicare Part B when you turned 65 and did not, you will likely have to pay a penalty for the rest of your life—or for as long as you have the coverage. The fine is 10 percent of the cost of Medicare Part B multiplied by the number of years after you turned 65 that you failed to enroll. It will be a continually growing fee because Medicare costs increase with inflation.

If your spouse’s employer-sponsored insurance program covers you, you will not have to pay the penalty, MedicareInteractive says. People who are eligible for the Medicare Savings Program (MSP) are also exempted. The people who are disabled, on Medicare, and already paying a penalty, do not have to pay the penalty after they turn 65.

The Penalty for Buying Medicare Part D Late

There is also a penalty if you enroll late for Medicare Part D. Enrolling is unnecessary if you already have a good prescription coverage plan. Instead of calculating this penalty based on the number of years you do not have Part D, it is determined by the number of months. It is 1 percent of the base premium, $34.70 for 2024, and rounded to the nearest $0.10. It is also permanent and must be paid as long as you have Medicare Part D.

About COBRA Coverage

People with Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage can usually keep COBRA for several months after they retire or lose their job. Once you turn 65, Forbes says that COBRA becomes the secondary insurer. If you do not have Medicare Part B, COBRA will usually only pay a minimum amount, and you will likely be stuck with a large medical bill.

When to Sign Up for Medicare

Everyone is required to sign up for Medicare around the time they turn 65. It is called the Initial Enrollment Period (IEP). The exception is those covered by a spouse’s health insurance plan or those who continue to work. This requirement exists because Medicare needs some healthy people to pay into the program to cover those who need medical care.

There is a seven-month window that you have to enroll in Medicare. It starts three months before you turn 65, includes your birth month, and goes three months after your 65th birthday.

When you sign up for Medicare, you can also enroll in Social Security if you are not already drawing benefits. Social Security benefits are available after turning 62. They increase in dollar amounts by 8 percent annually until you reach 70.

Automatic Medicare Enrollment

Some people are automatically signed up for Medicare when they turn 65. You become automatically enrolled if you already receive Social Security benefits or benefits from the Railroad Retirement Board. You must get the benefits at least four months before you turn 65 to be automatically enrolled.

Medicare Part C

An alternative to buying traditional Medicare would be to get one of the Medicare Advantage plans, also called Medicare Part C. Medicare Advantage plans are Medicare-approved health insurance programs offered by private insurers.

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Advantage plans are required to contain all the benefits of Medicare and more. They often include vision, dental, wellness, and fitness programs, many prescription drugs, and over-the-counter medicines. In some cases, Medicare says, some companies may add additional benefits to customize your plan to meet chronic conditions.
Depending on the company and state offering the plan, you may or may not have to pay additional premiums for an advantage plan. Many companies offer them without any extra charges other than the cost of Medicare Part B. Medicare says that people with permanent kidney failure (End-Stage Renal Disease) usually cannot get coverage under a Medicare Advantage Plan. Also, your plan may not be available if you move to a different state.

Things to Know About Medigap Policies

Medicare offers some specialized plans to help cover the cost of other medical care not covered by original Medicare. You must have Medicare parts A and B before purchasing Medigap plans. People who have Medicare Advantage plans cannot get Medigap plans.

Enrolling in Medicare when you turn 65 can help keep the cost of your medical insurance down. Health insurance is costly enough without having to pay additional penalties. Be sure to take advantage of Medicare’s Initial Enrollment Period and keep more money in your pocket during retirement.

The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.

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