Holding off onMedicare? Some tips to keep in mind

By Sandra Block

Kiplinger’s Personal Finance

If you’re stillworking when you turn 65 and have company-provided health insurance, or you’re covered by your spouse’s plan, youmay opt to postpone filing for some parts ofMedicare.

Because PartA(hospital insurance) is free formost beneficiaries, there’s no downside to signing up for this coverage when you turn 65, unless youwant to continue to contribute to your health savings account. You can’t contribute to anHSAonce you’re enrolled inMedicare.

Youmay, however, choose to postpone signing up for PartB(medical insurance) while you are enrolled and paying premiums to an employer-provided plan.

In that case, you may be eligible for a special enrollment period, which allows you to postpone enrolling in PartBwithout penalty as long as you’re covered by an employer plan. But to avoid penalties when you eventually sign up for PartB, it’s critical to confirm that your coverage meetsMedicare’s standards and that you avoid gaps in coverage.

Here’swhy: If you’re eligible forMedicare but no longer "actively covered" by company-provided health insurance, you have eight months to enroll inMedicare.

If you fail to meet that deadline, youmay be barred fromenrolling inMedicare until the next general enrollment period, which runs fromJan. 1 toMarch 31 every year.

If you gowithout coverage for a year or more, you’ll be required to pay a late-enrollment penalty of 10% of your PartB premium for every year you should have had coverage. The penalty lasts as long as you receiveMedicare benefits.

Medicare PartD(prescription drug coverage) has its ownlate-enrollment penalty. If you fail to sign up when you joinMedicare and go 63 ormore days without whatMedicare terms "creditable drug coverage," you’ll pay a penalty of 1% of the "national base beneficiary premium" ($34.70 in 2024) multiplied by the number of full uncovered months you didn’t have PartDor creditable coverage.

Recent legislation has made late-enrollment penalties somewhat less onerous for some retirees. It’s noweasier to correct errors that could trigger the penalty, such as wrong information fromyour employer or insurer. In addition, individualswho sign up during the general enrollment period will be able to receive coverage in the month after they sign up, says Casey Schwarz of theMedicare Rights Center.

In the past, retirees had towait until July for coverage to kick in, she says.

Given the potential penalties involved, it’s important tomake sure the coverage you havemeetsMedicare’s standards.

You should enroll in PartA, PartBand, in some cases, PartDif you’re 65 and have insurance through these sources.

Acompanywithfewerthan20employees: Your employer will probably require you to sign up forMedicare when you turn 65. Medicare generally becomes your primary coverage, and you’ll need to enroll tomake sure all your health care is covered.

COBRA: If you lose your job, the Consolidated OmnibusBudgetReconciliation Act allows you to continue your employer-provided coverage for up to 18 months, although you will likely pay the employer and employee share of the premium. But even thoughCOBRAprovides the same coverage you had while youwereworking, Medicare doesn’t consider it active coverage. If you lose your job, or lose coverage because your spousewas laid off, sign up forMedicare as soon as possible to avoid late-enrollment penalties.

DREAMSTIME