How to Avoid Medicare Enrollment Mistakes

03/27/2017 03:31 pm ET Updated Mar 28, 2017

If you aren’t careful about the timing of your Medicare enrollment, you could make a very costly mistake — one that will cost you for the rest of your life.

Here’s a key fact to keep in mind. The “full retirement age” for Social Security is now well past age 66, but the first decision date for Medicare is at age 65 — even if you are still working and covered by your employer.

Those who are already receiving Social Security at age 65 will be enrolled in Medicare automatically. Everyone else needs to determine what to do.

Diane Omdahl of 65incorporated.com, a Medicare benefits expert who advises corporate HR departments and some individuals, counsels: “Pay attention to Medicare at age 65. Do your research. What is true for another person probably won’t work for you.”

She notes that when you sign up for Social Security at any point after reaching age 65, enrollment in Medicare Part A (hospital insurance coverage) is required, even if you are still working and have coverage from your employer. But the real decisions revolve around Medicare Part B, which covers outpatient services, such as doctor visits.

Here are some of her tips to those who plan to work past age 65, are not yet taking Social Security, and aren’t sure whether to sign up for Medicare parts A and B, or not.

—The mandatory signup is one of the most confusing aspects of the Medicare law. You must sign up for Medicare Part A when you start receiving Social Security benefits after age 65. There is no premium to be paid. So you might as well sign up — unless you have a health savings account (HSA) at work. Taking Part A means you can no longer contribute to the HSA.

—If you are still working, covered by your employer’s health plan and not receiving Social Security benefits — or if your spouse is still working and you are covered under his/her group health plan — you are faced with a decision about signing up for Part B, for which you will pay monthly, with the amount depending on your income level.

Can you skip Part B? That depends on your current insurance coverage.

Large group plans cannot kick you out of the company plan when you reach age 65. If you lose your job after that point, there is an eight-month special enrollment period for Medicare Part B, which begins when you lose your job. So you don’t have to enroll in Part B if you have this group coverage.

There is an important exception: Employers with fewer than 20 employees are allowed to exclude individuals reaching age 65 from their group plans. Even if they let you stay on the company plan, you must enroll in Medicare Part A and B at age 65 because the company plan becomes a secondary payer. If you don’t enroll and then lose your job, or if your company drops its plan, you will have to wait until the following January to enroll in Medicare, with coverage starting the following July 1. You might need a temporary health policy if you can qualify at that point.

—Get Medigap insurance when you enroll in Part B. It’s important to realize that if you sign up for a Medicare supplement within six months of enrolling in Part B, you cannot be turned down for the best supplement policies for health reasons. So when you do sign up for Part B, pick your supplement at the same time.

Yes, it’s complicated. But penalties for late or incorrect signups can add up to lifelong monthly penalties on your Medicare Part B premiums. Omdahl says a Medicare mistake can cost seniors thousands of dollars every year. You can learn more about these issues or get counseling at www.65incorporated.com. Employers and financial planners can use the company’s software when advising workers before retirement.

Medicare ignorance is expensive. And that’s The Savage Truth.

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