There’s a reason some people opt to wait until age 65 to retire. Medicare eligibility typically begins at age 65. Retire sooner, and you could be looking at expensive health insurance premiums to maintain coverage.
It’s important to understand the rules of Medicare enrollment, though, especially because failing to sign up on time could lead to costlier premiums for the rest of your life.
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How Medicare enrollment works
Seniors typically get a seven-month window to enroll in Medicare initially. That period begins three months before the month you turn 65 and ends three months after that month.
If you’re covered by a qualifying group health plan at the time of your initial Medicare enrollment window and you don’t sign up, you typically won’t be penalized. Qualifying group health plans generally have 20 or more employees enrolled.
In that case, you’ll generally get an eight-month special enrollment period to sign up for Medicare that begins the month your employment ends or the month your group health coverage ends.
If you’re late signing up for Medicare and you don’t qualify for a special enrollment period, you could face a 10% surcharge on your Part B premiums for every 12 months you could’ve had coverage but didn’t. Over the course of a lengthy retirement, those extra costs could add up.
Plus, delaying your Medicare enrollment creates another problem — you may be without health coverage for a period of time. If you were to get hurt or sick during that window, you could end up with astronomically high medical bills.
Make sure you know the rules
If you want to spend less on Medicare premiums throughout retirement, it’s important that you understand when you’re supposed to enroll. Signing up on time could help you stretch your savings and avoid surcharges that eat into your income.
If you’re thinking of waiting to enroll in Medicare because you’re on a group health plan, confirm that it’s considered creditable by Medicare. You can typically get that confirmation by contacting your human resources department or your insurance company itself. That way, you can potentially avoid unpleasant surprises later.
Finally, do be aware that if you’re paying for COBRA to maintain your employer health insurance after leaving your job (voluntarily or otherwise), it’s not considered creditable coverage for Medicare purposes. If you delay your enrollment, you could face the aforementioned Part B surcharges, so make sure to sign up on time to avoid ongoing financial stress.
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