If you are already receiving Social Security, you will be automatically signed up for Medicare and will receive your Medicare card 3 months before your 65th birthday. If you are not receiving Social Security payments, you have a seven-month initial enrollment period to sign up for Medicare Part A and/or Part B which begins three months before the month you turn 65 and lasts three months after.
What Happens If You Missed Your Initial Enrollment Period?
If you missed your Initial Enrollment Period and aren’t eligible for a Special Enrollment Period (SEP), there’s an annual General Enrollment Period (January 1 until March 31) when you can sign up for Medicare Part A and/or Part B. If you enroll during this time, your coverage will begin July 1.
Do take note that there’s a late enrollment penalty and you could paying higher premiums.
> If you didn’t qualify for premium-free Part A, your premium may increase by 10 percent and you have to pay the higher premium for twice the number of years that you skipped getting Medicare Part A.
> For Part B, your premiums may increase by 10 percent for every full 12-months that you delayed getting Part B.
It would be best to enroll as soon as you are eligible for Medicare to prevent paying way more than you should.
Let’s Talk About Medicare’s Special Enrollment Period
Depending on specific circumstances, you may qualify for Medicare’s Special Enrollment Period (SEP) to sign up for Medicare Part A and/or B even if you missed your initial enrollment period. If you sign up during the eight-month SEP, there’s no late enrollment penalty fee. Below are the special circumstances that could make you eligible for SEP.
> If you’re serving in a foreign country as a volunteer.
> If you’re 65 or older and you or your spouse is working AND you have group health coverage through a current employer or union.
> If you’re 65 or older and your group coverage based on current employment ends. The eight-month SEP in this case begins the month after your employment or employer-group coverage ends.
If you do not sign up for Medicare after the end of the eight-month period, you need to wait for the next General Enrollment Period and you may end up paying a higher premium.
Will Signing Up for Medicare Affect Health Savings Account Contributions?
Based on IRS rules, you cannot contribute to an HSA if you’re already enrolled in Medicare. If you have a health savings account (HSA) plan, you may need to discontinue HSA contributions six months before taking Medicare to avoid a tax penalty.
You could receive a tax penalty because Medicare Part A will be retroactive for up to 6 months (as long as you were eligible for Medicare during those 6 months). The IRS will impose a six percent tax penalty on income and any contributions. If you made a contribution by mistake, withdraw it as soon as possible to avoid the penalty.
Even if you cannot make HSA contributions, you can still withdraw the money in your HSA to pay for Medicare and other qualified expenses.
When can you sign up for Medigap?
When you are first eligible for Medicare, you can get a Medicare Supplement plan (Medigap insurance) to fill in the holes in Medicare’s benefits. If you have a pre-existing health problem, you should use this to your advantage since your Medigap application cannot be declined based on your health when you first become eligible for Medicare. Some states offer a similar open enrollment opportunity to beneficiaries under 65.
Do you have any questions about Medicare Supplement Plans? Would you like to meet with an Advisor about your Medicare choices – call us at 866-323-1441!
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.