As a follow up to our blog, The “Golden” Medicare Years, part 2 discusses considerations as it relates to enrollment deadlines. There are two key situations explained below – turning age 65 and either having or not having access to group health insurance.
Once you have accumulated 40 quarters of eligible work credit, you will automatically be enrolled in Medicare Part A at age 65. If you have already started collecting social security, you will also be enrolled in Part B, otherwise you will need to enroll during the initial enrollment period which starts 3 months prior to turning age 65 and ends 3 months after turning age 65. If you miss the Part B initial enrollment period you can sign up during general enrollment, which is Jan 1 – March 31, with coverage beginning July 1. In order to avoid this gap in coverage and potentially higher premiums, you should sign up for Part B by the month you turn age 65.
It is important to know that during the 6-month time period after turning age 65 and enrolling in Part B, you have a guaranteed right issue for a Medigap policy (supplemental insurance). This means your medical history will not affect the ability to get a Medigap policy. If you apply for Part B outside of this 6 month window, pre-existing medical conditions can result in the inability to secure a Medigap policy or result in higher premiums.
Below are guidelines to help with common situations:
- Age 65, no longer working, not covered by a group health plan or still covered by a retiree plan:
a) You should enroll in Medicare.
b) If covered under a COBRA plan, enroll in Medicare within 8 months of retiring. Otherwise, when COBRA ends, a gap in coverage may incur by having to wait until the next general enrollment period which is Jan 1 – March 31.
c) Most people will want to forgo COBRA and enroll in Medicare since it is typically less expensive.
2. You or your spouse continue to work and have the option of being covered by a group plan:
a) Group plan insures less than 20 – enroll in Medicare since the plan does not have to provide coverage to Medicare eligible participants.
b) Group plan insures more than 20 participants – compare the costs and benefits of the group plan to Medicare and supplemental insurance.
c) Medicare Part A is free for those who qualify (i.e. you’ve accumulated 40 quarters of eligible work credit) and can provide additional hospital coverage beyond the group coverage, whereas Part B and supplemental policies provide extra coverage and require additional premiums.
d) If enrolled in Medicare Part B and group insurance goes away for reasons beyond your control, there is a 63-day window to apply for a supplemental policy with a guaranteed right issue.
Special Enrollment – if working or part of group plan
There are many considerations that go into when to apply for Medicare and careful planning around the deadlines will help assure the best outcome for your specific needs. If you have questions about your situation or are not sure what you should do, your BDF team can assist you with the basics and direct you to resources that can help you make the right decisions for your needs.
John D. Smith, CFP® is a Wealth Manager at BDF. A member of the Business Owner Team, he is adept at helping business owners integrate their unique business opportunities and risks into their personal wealth management plan, due to his 20+ years of experience. He finds that business owners, in particular, are often so focused on making sure that their business operations are running smoothly, they may overlook their personal financial well-being. John received his Bachelor of Science degree in Financial Counseling and Planning from Purdue University. He is a member of the Chicago Estate Planning Council and the National Association of Estate Planners and Councils and holds the ACCREDITED ESTATE PLANNER® designation. He is a member of the Financial Planning Association and a member of the University Club of Chicago and is Chairman of the club’s Wine Society.