If you’re approaching that magic age of 65, some things are about to change and you’ve got thinking to do, especially when it comes to Medicare. There are four enrollment periods and if you miss deadlines there could be penalties that cost you money for the rest of your life. And wouldn’t you rather have the money in your pocket instead of going into some bureaucratic black hole?
You are first eligible to enroll in Medicare when you turn 65. You enroll during your Initial Enrollment Period. The IEP is seven months long—three months before you turn 65, the month you turn 65, and three months after the month you turn 65. If you enroll during the three months before your 65th birthday coverage begins the 1st of the month you turn 65. Enrolling any other time during the seven-month window pushes out the beginning date of your coverage.
You need to decide ahead of time whether you’ll enroll in Part A and Part B Medicare—known as Original Medicare, if you will enroll in Part D prescription drug coverage, or whether you’ll choose Part C Medicare Advantage Plans which include Parts A, B, and D and possibly dental vision, and hearing coverage depending on the type of plan.
If you or your spouse continue working past age 65 and if you will be covered by an employer group health insurance plan you can delay enrolling in Medicare without penalty until the employer coverage ends. That’s when you get a Special Enrollment Period. The SEP lasts up to eight months after you retire or lose your employer coverage, whichever comes first.
But even with an eight-month window to sign up for Parts A & B, you have no primary health coverage until Medicare enrollment is complete. Even COBRA coverage is secondary to Medicare coverage. Medicare A & B covers 80% of costs leaving COBRA to pay 20%. So, for the period you do not have Medicare Part A and Part B you will have to pay 80% of your medical costs until your Medicare coverage kicks in. You can enroll in Medicare three months before your employer health coverage ends. It’s a good idea to enroll as soon as you can.
If you’re still working at 65 but don’t have access to employer group health insurance, defined as a company plan for 20 employees or more, you must enroll in Medicare at age 65 or be strapped with late-enrollment penalties for the rest of your life. The penalty is 10% for every year you were eligible to enroll in Medicare but didn’t. There is also a separate delayed enrollment penalty of 12% per year for Medicare Part D prescription drug plans if you don’t enroll by the deadline.
Even if you miss your Initial Enrollment Period or Special Enrollment Period, you get another opportunity to enroll during the General Enrollment Period. The GEP happens every year January 1-March 31. You can sign up for Parts A & B and your coverage begins July 1 of the same year.
The final enrollment period is Open Enrollment, October 15-December 7 each year. Open Enrollment is the time you get to make changes to your coverage. You can switch from Original Medicare to a Medicare Advantage Plan; change Medicare Advantage Plans; switch from a MAP back to Original Medicare; or join, drop or switch Part D prescription drug plans. New coverage begins January 1 of the following year.
4 enrollment periods and each one has its own unique characteristics:
- Initial enrollment period
- Special enrollment period
- General enrollment period
- Open enrollment period
Best advice, take the initiative. Make sure you start early enough to do your research and understand all your options, and don’t be afraid to ask questions. Know the deadlines and make sure you hit them. Medicare could care less whether you sign up in time or not. The deadlines are written in stone and if you miss a deadline, it’s on you. There are no second chances. Only penalties.