For many years, it was easy to know when retirement, Social Security, and Medicare were going to be a reality in our lives. Age 65 was the defining marker for all of those, including Medicare enrollment. That one birthday used to mean that retirement (and hopefully a pension), better healthcare options through Medicare, and the beginning of Social Security benefits were available. That is no longer the case.
The Social Security Amendments of 1983 (H.R. 1900, Public Law 98-21) contained two provisions which may have an impact on when an individual decides to retire. For those born from 1943 through 1954, the age you can begin full SSI benefits in age 66. This means that turning 65 is no longer an automatic trigger for Medicare enrollment. Because of this change in retirement age, many seniors are unaware that they still need to enroll in Medicare at age 65, not 66. Not enrolling when you are first eligible could lead to lifelong penalties on your Medicare premium.
Seniors who are already receiving SSI payments when they turn 65 are not affected by enrollment issues. You will be automatically enrolled is you are receiving SSI benefits. If you postpone your Social Security benefits either because you are still working or want a higher payout by waiting to start, you will need to enroll yourself in Medicare at age 65.
Medicare Enrollment Period
If you are still covered by group coverage from a retiree plan, or your or your spouse’s plan, you might want to wait to enroll in Part B. However, you can sign up for free Part A (if you’re eligible) anytime during or after your Initial Enrollment Period starts. Your coverage start date will depend on when you sign up. If you have to buy Part A and/or Part B, you can only sign up during a valid enrollment period. The General Enrollment Period (GEP) runs from January 1 through March 31 of each year. Coverage for enrollments during GEP will begin July 1 of that year.
If you are not covered by a group or retiree plan, you must enroll in Medicare during your Initial Enrollment Period (IEP). That period is a seven-month period that begins three months before the month of your 65th birthday. It includes your birth month and ends three months after your birth month. You can enroll in Part A and Part B of Medicare at that time. Part A is free as long as you worked 40 quarter hours (or 10 years) during your lifetime. It covers hospital and most other inpatient services.
Part B requires a premium. It covers physician and outpatient services. Part C is the Medicare replacement plan known as Medicare Advantage. Part D is the prescription drug program, which you will also need to look into when you first enroll in Medicare. You can also get a Medicare supplement plan to cover the gaps in Medicare. These are also known as Medigap plans. If you are confused about the Parts and Plans of Medicare, be sure to check out our article and video that fully explains both by clicking here.
The Late Enrollment Penalty For Medicare Part B
If you do not enroll in Part B when first eligible, and you are not enrolled in a qualifying group or retiree plan, you will be penalized. For every year that you delay Medicare enrollment in Part B, you have a 10% surcharge added to your Part B premiums. The surcharge is permanent – you will pay it the rest of your life. So if you delay enrollment in Part B for two years, that would mean a 20% surcharge added to your Part B premium going forward.
As mentioned previously, you can delay Part B enrollment. You must be covered by an employer plan (yours or your spouse’s) or a retiree group plan. Once that coverage ends, you will be eligible for a Special Enrollment Period (SEP) to enroll in Part B. That SEP gives you up to eight months to sign up for Medicare without a penalty.
One important note about ending group coverage. If you opt for COBRA, you will not be exempted from needing to enroll in Part B. The 8-month SEP runs concurrently with COBRA. It is based on termination of group coverage, not termination of COBRA. So you need to enroll in Part B when your group coverage ends, not when COBRA ends. Otherwise, you will have the late enrollment surcharge applied to all future Part B premiums. That penalty applies ONLY to your Part B premium and does not affect Medicare supplement premiums.
To enroll in Medicare past age 65, you will need to call Medicare. Their number is 1-800-MEDICARE (1-800-633-4227). TIP: call them late at night or really early in the morning. Their service is available 24 hours a day. You can also visit the website at http://medicare.gov.
Beneficiary Enrollment Notification and Eligibility Simplification (BENES) Act (H.R. 5772 and S. 3236)
As of the writing of this article, there is legislation in both houses of Congress to address this confusing enrollment process. In late August 2016, 73 state and national organizations that represent seniors, health insurers, unions, people with disabilities, and health care providers sent a letter to the lead sponsors of the legislation in both the House and Senate expressing their support for these bills.
“The basic rules underpinning the Part B enrollment system were developed more than 50 years ago, when Medicare was first established. Through bipartisan, low-cost reforms, the BENES Act shields people with Medicare from steep premium penalties, fills needless gaps in coverage and expands avenues for relief among those who mistakenly delay or decline Part B.” -From the coalition
The coalition also pointed out that over 750,000 Medicare beneficiaries were paying a lifetime penalty in 2014. These penalties were a result of not enrolling in Part B within the Initial Enrollment Period. The coalition also pointed out that the average penalty being paid was 30%.
In addition to this, Congressional leaders also received comments from eight past administrators of the Centers for Medicare & Medicaid Services (CMS) expressing their support. CMS is the agency that administers the Medicare program. These administrators were from both Republican and Democrat administrations. Their letter stated:
“The decoupling of eligibility ages for Medicare and full Social Security benefits, revisions to Medicare Secondary Payor law, and the growing number of Americans working past the age of 65 have, together, substantially complicated the decision-making process for eligible individuals and couples in deciding when and how to enroll in Medicare.”
Because of a shortened Congressional session and the fact that this is a Presidential election year, some believe the standalone bill has little chance of passage. However, once new Medicare premiums and Social Security benefits are announced for next year, this bill could attach itself to legislation addressing those issues. In 2015, Congress passed legislation addressing a very large Part B premium increase. If they were to do so again this year, this new bill could be lumped in with it. This would give it a much better chance of passage.
If you are still confused about Medicare enrollment periods and how this can affect you, please give us a call or write to us. The phone number is 888-228-6119. It is at the top of the page. You can use the request form on the right side of the page to send your questions, as well.
The advice on this website is informational. Please consult with us before making a purchasing decision to determine what is best for your individual situation. You can contact Keith Murray at 888-228-6119 or [email protected].
Keith Murray is an independent agent and the owner of Integrity Senior Solutions Inc. He has over 25 years of experience working with Seniors to meet their insurance and financial needs.