Medicare is an essential benefit for many retirees. Whether you choose to retire early, at full retirement age (currently age 66) or continue working beyond full retirement age, there are Medicare enrollment rules that must be followed. If not handled correctly, you could suffer the consequences now and for the rest of your life.
At age 65, individuals become eligible to sign up for Medicare Part B, which covers outpatient services. If an individual retires at or before age 65 they must enroll within a 7 month time frame beginning 3 months before their 65th birthday. If still working and covered by an employer's group health plan, you can forego Medicare without consequences. However, once you retire and leave your job, you must enroll in Medicare Part B within 8 months. This is known as the "special enrollment period".
After an individual retires, an employer may continue to offer health care coverage under COBRA (under current law, an employer with 20 or more employees must allow former employees to buy into the group health plan for up to 18 months).
Choosing to be covered under COBRA could have unexpected consequences. If over 65 and retired, most group health insurance plans will only pay for medical expenses that Part B won't cover (whether you actually have Medicare or not). If the health insurance company does not realize that an enrollee is eligible for Medicare, but later finds out that he/she was, it could stop paying claims and may try to recoup the benefits already paid out. If a retiree does choose to be covered under COBRA, they should enroll in Medicare when first eligible to avoid late enrollment penalties.
If the Medicare enrollment period is missed, you will not be eligible to enroll in Medicare Part B until the next general enrollment period which runs from January 1 to March 31, and coverage would not begin until July. If coverage through a former employer expires and you are required to wait until the next general enrollment period to obtain Medicare, you could find yourself uninsured for several months.
In addition, the late enrollment penalty is equal to 10% of the monthly premium for each full 12-month period that you could have had Medicare Part B, but didn't sign up. This penalty increases your Part B premiums for the rest of your life.
When selecting health insurance after you retire and/or turn age 65, carefully consider Medicare enrollment rules before making a decision. In addition to Medicare Part B, there are also important deadlines for enrolling in Parts A, C and D. For more information, you can visit the official Medicare website at: http://www.medicare.gov.