Wednesday, November 17, 2010

Expect penalties if not enrolled in Medicare at 65

Computer Many people consider April 15th the date to remember. We have to be on our toes at tax time because a late return could result in a penalty.

As the first of the baby boomers turn 65 next year, Medicare will present them with new dates to remember and another set of penalties if they’re not on their toes.

At a recent presentation of Medicare coverage choices, I watched the audience sit openmouthed in disbelief as they were told that not signing up for Medicare within the appropriate window could result in penalties for the lifetime of their coverage.

So in the spirit of spreading the news to boomers nearing 65 who are overloaded with news and information, here are the simple facts about Medicare penalties.

There are two main choices for coverage: Medicare Part A (hospital insurance) and Medicare Part B (medical insurance).

Medicare Part A is free for most enrollees, so everyone is encouraged to sign up. There is a seven-month window for enrolling: three months before your birthday month, your birthday month and three months after.

What if you’re still working and receive healthcare coverage from your employer? No worries, your employer’s coverage is primary and Medicare is secondary. What’s not to love about “free” insurance?

Medicare Part B is not free, which is why some people delay coverage. Only individuals who are still working for an organization with more than 20 employees and receiving healthcare benefits from their employer can delay Medicare Part B coverage without penalty. Everyone else is required to sign up.

The penalty for delaying enrollment is 10 percent per year, so if you choose to delay a year, you would pay a 10 percent premium for the lifetime of your coverage. If you delay five years, you would pay a 50 percent premium.

For an annual Medicare Part B plan with a cost of $7,000, delaying coverage for five years would increase your premium by $3,500 or more each year for the life of your coverage.

Why is there such a severe penalty? The intent of the program is to get you into the plan when you are young (yes, 65 is young) and begin paying when you are healthy to “fill the tank” before experiencing significant medical expenses.

There also is a penalty with Medicare Part D (prescription drug coverage). For every month you don’t sign up, a 1 percent penalty is levied.

And since the annual enrollment runs from Nov. 15 to Dec. 31, missing that window could mean a penalty premium of as much as 12 percent. That penalty also extends for the lifetime of your coverage.

So what’s the prudent thing to do? Mark your calendar three months before your 65th birthday and visit  to learn more about Medicare.

Another good website for information about Medicare is .

Whether you’re a newcomer to Medicare enrollment or you’ve been signed up for some time, you will find a great tool to search for and compare Medicare coverage options at .

If you’d like more personalized help, call RSVP at (805) 381- 2742 or HICAP (Health Insurance Counseling and Advocacy Program) at (800) 434-0222.

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Categories: Elder FinanceNumber of views: 2044

Tags: Medicare rules

Andrea GallagherAndrea Gallagher

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