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Preparing for Medicare: Know when to enroll to avoid extra costs and penalties

By September 3, 2019June 29th, 2020Resources

Preparing for Medicare:  Know when to enroll to avoid extra costs and penalties

By Robert Wasky, Medicare Planning Specialist


Sixty-five traditionally signifies retirement and the beginning of your eligibility to receive Medicare benefits.  But the timing and process for enrolling will differ based on each individual’s situation.  Sorting through your options may be time consuming and confusing, but worthwhile, as mistakes can be costly and last a lifetime.

There are many facets to understanding Medicare…benefits, costs, supplemental insurance plans, etc. … this article focuses on the timing for enrollment.

Once you understand the options, it’s imperative to select the best one based on individual circumstance.  We strongly advise that you consult a knowledgeable Medicare planning resource for help.


Question: What is Medicare and should I sign up when I turn 65?

Part A

Medicare Part A helps pay inpatient hospital and skilled nursing facility expenses and is usually premium-free.  If qualified for premium-free coverage, in most circumstances it makes sense to enroll at 65.  Even if remaining on employer coverage, Medicare Part A will coordinate with current benefits so there is usually no downside.

Exception, if you want to continue contributing into an HSA while remaining on employer plan, you cannot be enrolled in any part of Medicare.

Part B

Part B helps pay medical costs such as doctors and health providers, and carries a monthly premium based on income.  While most people enroll at age 65, since Part B isn’t premium-free (unless you qualify for Medicaid), it makes sense to delay enrollment and avoid paying the monthly Part B premium under certain circumstances, mainly when remaining on group insurance.

If you have credible coverage through your employer or spouse (and that employer has 20 or more employees), you can usually delay enrolling in Part B until you leave the group plan.  When ready to transition to Medicare, there is a Special Enrollment option (summarized below) for enrolling in Part B without penalty or gap in coverage.

However, be aware that there are several exceptions.  If enrolled in Cobra or a retirement plan, you will need both Medicare A and B right away.  Moreover, often people find Medicare and Supplemental insurance a better option to their group plan and opt for Medicare when first eligible.

If considering delaying Part B or leaving employer plan for Medicare and supplemental insurance, speak to us to make sure you aren’t making a mistake and incurring penalties.


Know your Medicare Enrollment Periods

There are three ways to enroll in Medicare.

Initial Enrollment Period (IEP)

The Initial Enrollment Period is the first opportunity for most people.  IEP is a seven-month window that begins three months before the month of your 65th birthday and continues for three months after. During this time that you can enroll in Part A and Part B and a Part D drug plan or a Medicare Advantage Plan.  If your birthday is on the first of a month, eligibility starts the prior month.

Special Enrollment Period (SEP)

The Part B SEP is an eight-month period to enroll in Part B after you no longer have coverage from current work (employer insurance.)  There is no late enrollment penalty if using the Part B SEP option.  You also have 63 days after employer coverage ends to enroll in a Part D prescription plan and avoid gaps or penalties.


General Enrollment Period (GEP)

You can enroll during the Medicare General Enrollment Period (GEP) if you missed your Initial or Special Enrollment periods.   You can sign up for Medicare A and B between January 1st and March 31st of each year and coverage starts July 1.  This option almost always carries a lifetime late enrollment penalty for Part B of 10% of the standard Part B premium cost for each full year enrollment is delayed.

Reminder – even if you have great employer coverage and plan to continue working beyond 65, there must be 20 or more employees at your company for Medicare to consider this creditable coverage.


Key Takeaways

Medicare is confusing and made even more so by the mounds of advertisements and marketing materials cluttering our lives.  For anyone approaching eligibility for Medicare, we suggest you be proactive in seeking information and then finding an independent, objective resource to help evaluate your situation and best options.

Once on Medicare, the next step is to evaluate the many choices for obtaining supplemental coverage that coordinates with Medicare.  This important topic is a critical component of your retirement planning.

Seek out the right guidance for making informed choices and avoiding potential late enrollment penalties.

Robert Wasky is an independent Medicare Specialist and licensed insurance professional.  If you have questions related to this column or other related topics, we invite you to call him at 973-975-0064 or email