At MPC Insurance Group, we receive a lot of calls from individuals approaching the age of 65. The question always is, what do I need to do and when do I need to do it? It is a very important question because delaying enrollment in Medicare could result in a lifetime monthly penalty which could amount to a lot of money in retirement.
When and individual turns 65 and has paid into Medicare for 40 quarters (10 years), through the FICA payroll tax while they were employed, they are eligible to receive Medicare benefits. An individual turning 65 may apply as follows:
- 3 months before the month of your birthday
- The month of your birthday
- 3 months after the month of your birthday
- (a total of 7 months)
If you apply in the 3 months before the month of your birthday, your Medicare will begin the first of the month of the month of your birthday. If you apply after your birthday, it will be effective the first of the month after you apply, although it could be delayed if there are processing delays.
As an example, if your birthday is August 24th, you can apply starting May first. If you apply early, your coverage will be effective on August first. You can also apply as late as November 30 (although I wouldn’t advise that) and your coverage will be effective on the 1st of the month following your application depending on when it is processed. We always encourage our clients to enroll 3 months early. If you are enrolling in Medicare for the first time, you can enroll on line at SSA.GOV or by calling 800-772-1213 or by visiting your local Social Security office but call first to see if you need an appointment. If you do not apply in your 7-month window, you may be subject to a monthly financial penalty this penalty will be assessed for the remainder of the time you are on Medicare.
Of course, there are exceptions to every rule and the Medicare eligibility guidelines have a few. First, if you elected to take Social Security before you were 65 (you can take SS as early as 62 but you should see a financial advisor before you make your SS election) you will automatically be enrolled in Medicare when you turn 65 and you do not need to apply.
Also, if you are 65 and still working and covered under your employer’s health plan, you can defer enrolling in Medicare without a penalty, if your employer coverage is through an employer with more than 20 employees. If you’re your employer has less than 20 employees, Medicare is the primary payer and you must enroll in Medicare. If you do decide to defer enrolling in Medicare, you may still want to enroll in Medicare Part A (hospital coverage) because Medicare part A is premium free and there is no downside to enrolling (If you enroll in Part A, you cannot continue to contribute to an HSA account). Medicare Part B (physician services) does have a premium so if you are already covered under your employer group plan and you are not retiring, you should consider deferring Medicare part B until you retire or until you decide to come off of your employer plan.
Once you are enrolled in Medicare and have a Medicare plan, there are times when you can change plans. If you have a Medicare Advantage plan, you can switch plans during the Annual Election Period (AEP) which occurs from October 15 to December 7. If you switch plans during this period, your new plan will be effective on January 1, of the following year. Between January 1 and March 31, there is the Open Enrollment Period (OEP) and you can make one switch during that period as well. Again, this is only for Medicare Advantage plans. If you switch during that period, your new coverage will be effective the 1st of the month after you switch.
If you are enrolled in a Medicare Supplement plan (Medigap plan) you can switch plans at any time during the year but you will be subject to Medical underwriting and can be denied coverage for certain health conditions. Also, if you have a standalone PDP with your supplement plan, that plan is subject to the Medicare Advantage rules discussed above. We urge you to contact us before switching Supplement plans.
I know, I know, this can be thoroughly confusing! That is why we encourage anyone turning 65 to contact us at least 3 months before their 65th birthday. We will remove the confusion and remove the worry and handle these confusing issues for you.
Hopefully however, this has clarified some of the issues surrounding Medicare for individuals turning 65. If you have questions, please feel free to correspond with us at: info@mpcins.com or call us at 717-980-3202.
