Pitfalls and Dangers Abound
A generation ago, when 65 was the common age for retirement, people signed up for their Social Security benefits and at the same time, they signed up for Medicare Part A and Part B. But the world has dramatically changed since then. More and more people are postponing taking Social Security until they have attained their highest benefit levels. Other people are continuing to work late into their 60’s or even longer, many because they want to remain productive. This can be where the confusion begins about how and when to enroll in each of the parts of Medicare.
A popular misconception that adds to the confusion is the belief that Social Security (SS) and Medicare are one and the same thing. One reason for the confusion might be that you enroll in Medicare through the Social Security Administration. But SS is what you paid into while you were working — once you retire beginning at age 62, you are eligible to start withdrawing from those funds. Medicare, on the other hand, is the healthcare program for people who are 65 and older. Unless you are still working for an employer with 20 or more employees, you MUST enroll in Medicare. Otherwise you will not be able to obtain health insurance.
Some people also falsely believe that they must be signed up for SS in order to receive Medicare. Not true. If you need Medicare Health coverage and plan to postpone signing up for your SS benefits, you need to actually ENROLL in Medicare before your 65th birthday. The government will not send you a notice that you should enroll in Medicare. But here’s a hint: Six months before your 65th birthday your mailbox will start to be stuffed with sales brochures from Medicare Supplement programs. That’s the time (or months before) to talk with our resource. (More on that below)
But just because you’re turning 65, it doesn’t automatically mean you should enroll in Medicare. Everyone’s situation is different. If you are still planning to work after you turn 65 it’s imperative that you speak to the Human Resource or Benefits Administrator at your company. Some of the questions to ask include:
- Should I sign up for Medicare? Just Part A, or Part A AND Part B?
- How does my employee plan work with Medicare?
- What will my premium be? (You’ll want to compare your employer’s plan with the options available with Medicare)
- If I drop my employer’s coverage to go on Medicare, will my dependents lose their coverage also?
Some employer’s recommend that you enroll in Part A since it’s free and it may help if you have a major hospitalization that your employer’s coverage won’t cover the total amount. If you have excellent coverage through work, then you may be able to wait and enroll in Part A and Part B when you retire.
However, if you work for a company with LESS than 20 employees, you must enroll in BOTH Part A and Part B since Medicare is the primary payee. (With 20 or more employees, the employer’s coverage is the primary payee.) You should also ask your benefits person these questions:
- Can I keep my current health plan when I turn 65?
- How much will it cost?
- Will my benefits change under the coverage when I turn 65?
- Will a Medicare Supplement plan offer me better coverage? (You will probably need to determine this yourself or speak to a Medicare resource specialist)
- Will my dependents still be eligible for coverage if I decide to drop it and get a Medicare supplement plan?
People who retired before age 65 and have retiree coverage through their employers, or are on COBRA, should also speak to their benefits administrator several months before they turn 65 and ask these same types of questions. Make sure you understand your options and the consequences of failing to enroll in Medicare when you are eligible.
To make sure you get objective advice when it comes to Medicare (and long-term care) we’ve retained the services of Eileen and Allen Hamm, Healthcare in Retirement experts, for our clients. They can get you through the Medicare maze smoothly and without penalties. Contact us if you’d like to speak with them.