People are always telling me 40 is the new 30 and 50 is the new 40. Numbers do not lie, especially with age, but it is true that people are living longer and staying healthier later in life. For those of you approaching retirement, age 60 may very well feel like the new 50, and that youthful energy could keep you working well past retirement age. Of course, if you are approaching 65 you are subject to that twilight zone of rules surrounding Medicare, and if you are planning to work past 65 the rules for enrollment get even more complicated.
If you are already collecting Social Security benefits then your enrollment in Medicare is automatic. If you are not receiving Social Security benefits, then you have an initial enrollment period of three months before and three months after turning 65. If you miss the initial enrollment period you can face a fine and risk going without Medicare for several months even after you enroll.
Many who work beyond 65 keep their employer’s group health insurance because it the less expensive alternative. Medicare Part A, which covers hospitalization, is free to anyone over 65, but many people with an employer’s group policy postpone Medicare Part B, which covers doctors visits and other forms of outpatient care. The monthly premium for Medicare Part B is between $96.40 and $353.60 depending on your income.
You may choose to supplement your employer’s group policy with other private policies and Part D prescription drug plans that cover what Medicare doesn’t cover. There are also private Medicare Advantage plans. All these plans usually charge premiums, co-payments and deductibles.
You can switch at any time from your employer’s group health plan to Medicare. When you stop working you have eight months to sign up for Part B. This enrollment window is called the special enrollment period. If you miss the special enrollment period you must wait for the Medicare general enrollment period from January 1 through March 31 to sign up. Unfortunately, if you wait for the general enrollment period your Part B benefits will not go into effect until July and you may face late-enrollment penalties.
If you plan to work beyond 65 and delay enrolling in Medicare, you should keep good records and detailed notes from any phone conversations you have with officials or financial professionals that advise you. Your notes can be instrumental if you have to file for equitable relief from the Social Security Administration. Equitable relief is a legal protection that allows for immediate enrollment in Medicare Part B without penalty.
Consult the Medicare web site for more detailed information and to setup your “MyMedicare” account if you are ready to get started with enrollment.
I know it’s complicated, but the key is to stay on top of it. Call and ask questions to make sure you have completed everything you need to. Waiting and procrastinating can be costly!
Tara Scottino, CFP®
Senior Vice President
Carter Advisory Services