Happy Birthday! You’re turning 65. There’s cake and ice cream, presents, and your application for Medicare. Yep, this is when you sign up for the federal health insurance program you’ve been paying for all your working life. Signing up isn’t difficult, but there are things you need to know to get the most out of Medicare and avoid penalties (yes penalties).
You Don’t Sign Up with Medicare
It sounds crazy, but it’s true. You sign up for Medicare with the Social Security Administration. The easiest way to sign up is online at the SSA website.
The Enrollment Window
When you turn 65, your Initial Enrollment Period (IEP) opens. This is the first time you are eligible to enroll. The IEP is a seven-month window that runs 3 months before your 65th birthday, the month you turn 65, and 3 months after the month you turn 65.
If You Miss the IEP Window
If you miss the Initial Enrollment Period, you can sign up later, during the annual General Enrollment Period (GEP), which runs from January 1-March 31 with coverage beginning July 1. But if you wait until the GEP or later to sign up, you’ll get hit with a late enrollment penalty for Medicare Part B, which covers doctor visits and other outpatient services. The penalty is 10% for each 12-month period you could have had Part B but did not.
Special Enrollment Period
There is an exception to the Part B late enrollment penalty. If you are 65 and have creditable health insurance coverage from your employer or a spouse’s employer then the late enrollment penalty doesn’t apply to you. When you leave your employer or no longer have creditable coverage, you get an 8-month Special Enrollment Period (SEP) to sign up for Medicare Parts A, B, C, and D without penalty.
This is a little tricky though. While you have 8 months to enroll in Part A and Part B without penalty, you only get 2 months to sign up for Part C or Part D without penalty. If you enroll for Part C or D later, your penalty will be 1% of the national base beneficiary premium (which is $33.37 in 2022) for every month you were not signed up for Medicare drug coverage.
Even if you have employer insurance, the company may require you to enroll in Parts A and B if the employer insurance becomes secondary coverage when you turn 65. So, it’s always a good idea to talk with the employer’s health care benefits department before you make any decisions about enrolling for Medicare at 65 or postponing.
Automatic Enrollment and Paying for Medicare
If you started receiving your Social Security benefit before turning 65, you will automatically be enrolled in Medicare Parts A and B. There is no cost for Part A. The monthly premium for Part B will be withheld from your monthly Social Security payout.
If you have not started receiving Social Security by the time you turn 65, you will have to enroll for Medicare on your own. Medicare will mail a quarterly invoice for your Part B premiums and you mail a check.
If you prefer to pay monthly, you can set up Medicare Easy Pay. You’ll need to create an online Medicare account. Once set up, click “My Premiums” and then “Sign Up” to complete a short online form. The Part B premium will be deducted from your bank account on the 20th of each month. It takes 6-8 weeks to have Easy Pay in place.
You’ll get a monthly statement letting you know the amount deducted. Your bank statement will show a payment to “CMS Medicare Premiums.”
When you eventually sign up for Medicare, the Part B premium will then be deducted from your Social Security check.