Medicare Enrollment – Doing It Wrong Could Cost You!
By Jennifer Rossettini, CFP®
A recent New York Times article described the plight of a gentleman who turned 65, but failed to enroll in Medicare because he was already enrolled in a health insurance plan through his employer[i]. While this plan of action is fine under certain circumstances, he was subsequently laid off from his employer and later learned that the coverage he received under COBRA did not exempt him from the complicated Medicare enrollment rules and the penalty for not enrolling in a timely manner.
The Basics of Signing Up
If you claim Social Security benefits before your 65th birthday, enrollment in Medicare Part A (hospitalization) and Part B (outpatient services) is automatic. If you have not yet applied for Social Security before your 65th birthday, you must take proactive steps with regard to Medicare to avoid problems.
Medicare offers an initial enrollment period around your 65th birthday – beginning three months before your birthday, including the month of your birthday, and continuing for the three months after your birthday. If you miss this window, you will be subject to a late enrollment surcharge equal to 10 percent of the standard Part B premium for each 12 months of delay – a penalty that never ends. Late enrollment also exposes you to significant gaps in coverage while waiting for coverage under Medicare, because late enrollees must wait until the next General Enrollment Period, which runs from January 1st to March 31st each year, with coverage not beginning until July 1st.
- Relying on employer coverage – People who are actively employed at age 65, and their spouses, can delay enrollment in Medicare as long as they are “actively” employed by the employer. COBRA does not count as active employer group coverage. In addition, if you work for a company with 20 or fewer employees, Medicare becomes the primary payer, so you must sign up when you turn 65.
- Having a Health Savings Account – HSA’s can only accept contributions from people enrolled in high-deductible health plans and Medicare does not qualify as a high-deductible health plan. Although you can continue to withdraw from an HSA while enrolled in Medicare, you should stop contributing to one six months prior to your Medicare enrollment date to avoid tax penalties.
- If you are insured under the Affordable Care Act – you must switch to Medicare at age 65, because marketplace coverage is considered secondary to Medicare. Otherwise, you will have to wait until the General Enrollment Period, leaving you exposed to coverage delays plus penalties.
- If you are on Retiree Coverage – similar to marketplace coverage, retiree coverage is always secondary to Medicare. A common error is turning down Part B Medicare coverage in the belief that the supplemental retiree coverage is primary. Again, failing to enroll in Medicare at age 65 will expose you to coverage delays and penalties.
In light of the foregoing, a simple rule of thumb would be to always consider Medicare to be your default, primary coverage.
Ask Kit Kat: Coyotes Near Us
Hook Law Center: Kit Kat, what can you tell us about coyotes who infringe on human’s territory?
Kit Kat: Well, they’re only doing what comes naturally. Humans have drastically reduced the number of wolves countrywide, so this has allowed coyotes to flourish. Coyotes can be found in every state except Hawaii. Coyotes can live in the desert, in swamps, and in urban areas. They’re extremely adaptable. Coyotes won’t purposely seek humans out, but sometimes their territory overlaps with ours.
What can we do to more peacefully co-exist? There are several things actually. First of all, don’t attract them by leaving trash cans unsecured. That’s an invitation to pick up easy meals. Also, don’t let small pets like cats and small dogs roam outside without supervision. Small domesticated animals resemble squirrels, mice, etc. To them, they’re all fair game. Next, coyote pups are born in the spring. If you know a den is nearby, avoid it. Coyote parents take their role seriously. They mate for life, and they’re protective of their offspring. If they sense that humans are getting too close, they may follow you, to get you away from their pups. Lastly, if you do encounter a coyote at close range, you can wave your arms, throw sticks, etc. They’ll get the picture, and probably leave you alone. They rarely attack humans. In fact, there has only been one fatality ever recorded in the United States from a coyote attack. That’s a pretty good record, if you ask me! (Nancy Lawson, “The Misunderstood Coyote,” All Animals, January/February 2019, p.38-39)