Whether you are retired or still working, Medicare will likely be in your future when you turn age 65. We are going to look at some things you need to know about Medicare or you may face permanent, hefty penalties, and this is no joke. So read on as this may save you a bundle in penalties.Medicare and social security used to go hand in hand. When full retirement age was 65 for everyone, most people would apply for social security and Medicare at the same time. But now that full retirement age is increasing, many baby boomers will become eligible for Medicare at 65, before they become eligible for full social security benefits at 66. This can create problems for people not filing for social security benefits until after age 65. Because enrolling in Medicare is NOT automatic (unless you filed early for social security – then it is automatic). The most important thing to know about Medicare is that you must proactively apply for Medicare when you turn age 65 - unless you are already receiving social security benefits at age 65 (in other words, you applied early).
What happens if someone forgets to sign up at 65?
If you don’t enroll on time, a 10% permanent penalty will be added to your part B premiums for each 12 month period that you go without applying. That’s a 10% permanent penalty for EACH 12 month period; I don’t know if you fully understand this, so let me illustrate: If you wait 12 months after your Initial Enrollment Period is over, you will have a 10% penalty for that 12 month period. This 10% penalty is added to your part B premium as a permanent price increase! But hang on, we are not done yet. If you wait 24 months, then the permanent penalty is 20%, 36 months 30% - Are you starting to get the picture? See now why it is so important to be proactive in enrolling? You’ll have to pay this penalty for as long as you have Part B. (An exception exists if you are covered under a group health plan that covers 20 or more employees and is based on current employment).
So ok, what does this mean for you? Several months before your 65th birthday you will need to find out how your existing insurance will work with Medicare. Then enroll in Medicare three months before your 65th birthday. Some people think enrolling in Medicare is automatic, it is not unless you are already receiving social security benefits. If you are going to file for social security AFTER age 65, then you will need to be proactive in signing up for Medicare three months before you turn age 65. Now I am really hoping we saved a lot of people out there from incurring those penalties on their premiums. We advise our clients on these matters and as always, if you need more information on this or any other topics we discuss just contact our office for more information. Thank you for reading!
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.