When Should I Sign up for Medicare?

If you ask most people the question of when they should sign up for Medicare, they’ll most likely say age 65. While that is true for many, it’s not a hard-and-fast rule, and even if that is the age you yourself need to sign up, it can be more complicated than that due to the various options you have available.

Let’s look at a few of the different aspects of signing up for Medicare to help you make a more informed decision.

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Age 65 Is A Milestone Age

This is the usual answer to the question, but even then, there are things you’ll have to consider. For example, if you’re still working at age 65, you can delay enrolling without penalty.

But enroll in what, exactly? Once you begin to receive Social Security benefits, you’re enrolled in Medicare Parts A and B automatically. Part A comes with no cost to you, so it’s an easy decision to start that coverage.

Part B, however, has a monthly premium. The good news is that the premium will be deducted from your monthly Social Security benefits if you’re receiving them already.

You can turn down Part B coverage at 65 if you wish. (1)

It’s Automatic with Social Security

You may not know that there are different age milestones for signing up for Social Security benefits; you can delay starting your benefits past 65, usually for a larger monthly payout. The important thing to realize is that your Medicare and Social Security benefits aren’t linked; even if you’re delaying your Social Security, you will have to deal with Medicare when you turn 65 or face costly penalties in the future.

The sign-up period for Medicare starts 3 months before you turn 65 and runs until three months past your birthday month. If you’d like your Medicare benefits to start when you turn 65, you’ll need to sign up before your birthday.

Do I Have to Sign Up If I’m Still Covered at Work?

This is where things may start to seem complicated. You can delay signing up for Medicare past age 65 if you’re covered by insurance through your (or your spouse’s) employer…but only if the company you work for has 20 or more employees.

If you work for a company larger than that, you’re allowed to delay. If you work for a company with less than 20 employees, you’re still required to sign up for Medicare at age 65; it doesn’t matter if you’re already covered at work.

In all cases, you must sign up within 8 months of leaving the workforce. Also, if you’re receiving Social Security benefits, you’re still automatically enrolled whether you’re working or not. A good rule of thumb is that you must start Medicare when you start receiving Social Security benefits, with no exceptions. (2)

What Happens If I Don’t Sign Up When I Should?

The short answer is…it will cost you.

The longer answer is that it’s still possible to sign up for Medicare after you should, but you’ll be assessed a “late-enrollment penalty” for doing so. Also, in that case, there will only be certain times of the year where you’re able to sign up; the window for open enrollment in Medicare if you’re signing up outside of the special circumstances we talked about earlier is January through March each year, with your benefits starting July 1st of that year.

What’s the Late-Enrollment Penalty?

The penalty doesn’t sound too bad; ten percent of your Medicare B premium. Once you understand it, though, you’ll see that it’s something to be avoided.

Not only does the penalty apply for as long as you have Medicare, but the penalty is 10% of the premium for each year you missed signing up. If you wait until age 70 (again, aside from the exceptions we talked about earlier), you’ll face a 50% penalty being added to your Part B premium every year while you have coverage.

This can quickly add up to thousands of dollars you don’t have to pay, so do your research now on both Medicare and Medigap insurance, which can help cover some of the costs Medicare doesn’t; there’s plenty of information available to help you navigate the confusing Medicare system…and avoid paying more than you have to, especially with the help of Medigap insurance. (3)

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(1) https://www.medicare.gov/what-medicare-covers/what-part-b-covers
(2) https://www.medicare.gov/sign-up-change-plans/how-do-i-get-parts-a-b/part-a-part-b-sign-up-periods
(3) https://www.investmentnews.com/article/20160419/BLOG09/160419920/how-to-properly-defer-medicare-enrollment

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