When to Enroll in Medicare

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It is easy to understand why everyone should look into enrolling for Medicare as soon as they are eligible.

The monthly premium for private insurance is almost the same cost as an entire year of Medicare coverage at the standard premium.

Currently in 2021 without financial help, the monthly silver plan premium in Albemarle County for a 64 year old is $1,181 per month or $14,172 for the year. In contrast, the 2021 Medicare Part B monthly premium is $148.50 or $1,782 for the year. While a higher modified adjusted gross income (MAGI) will make your monthly premiums higher thanks to IRMAA Medicare surcharges, even the highest Income Related Monthly Adjustment Amount (IRMAA) price of $504.90 per month or $6,058.80 for the year is still cheaper than private insurance.

Seniors are eligible for Medicare on their 65th birthday. This is called the “initial enrollment period” and gives you from 3 months before to 3 months after your birth month to enroll. For example, if you turn 65 on December 25, 2022, you could enroll in Medicare any time between September 1, 2022 and March 31, 2023.

If you or your spouse are still working and receiving employer group health plan coverage (as defined by the IRS) through that employment or union, then you are also given a “special enrollment period” to sign up for Part B. The special enrollment period is an 8-month window starting either after the employment or after the group health plan ends, whichever comes first.

It is important to note that The Consolidated Omnibus Budget Reconciliation Act (COBRA) and retiree health plans aren’t considered coverage based on current employment. Individuals covered under these types of insurance would do better to enroll for Medicare during their initial enrollment period.

While individual insurance is basically always more expensive than Medicare, sometimes employer health insurance is cheaper than Medicare. It all depends on your specific employer’s plan, how your MAGI compares to the IRMAA surcharge tables, and how many family members you have on your employer coverage.

If you miss your initial enrollment period, then you must wait for the next open enrollment. For Medicare, open enrollment is between January 1 and March 31 of any year.

Additionally, if you do not enroll during your enrollment eligibility window, then your premiums are hit with a late enrollment penalty.

Generally, the late enrollment penalty increases your premiums by 10% for each 12-month span you could have had Part B but didn’t sign up.

This penalty is applied only to your standard Part B monthly premium, not any IRMAA surcharges you may face. As the Social Security Administration explains, “For IRMAA beneficiaries, Part B premium surcharges for late enrollment or reenrollment will continue to be calculated based on the Part B standard monthly premium.”

For example, if your only eligible window was when you turned 65 on December 25, 2022, and you did not enroll in Part B until age 68 on July 4, 2026, you would end up paying an additional 30% on your Medicare premiums (42 months / 12 months = 3 full 12-month periods and a half that doesn’t count).

If you are approaching your eligible enrollment, you may benefit from making an appointment with a Medicare counselor. Medicare counseling is a local specialty as it requires knowledge of local health insurance markets and local health care providers.

To find a Medicare counselor in your area, try searching for “medicare health insurance counseling” with the name of your state or county.

Here in Charlottesville, Virginia, there are free Medicare counselors available through The Jefferson Area Board for Aging (JABA). They also offer a “New to Medicare?” free class at the local library several times throughout the year.

Photo by Yannes Kiefer on Unsplash

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William Rice is a financial analyst for Marotta Wealth Management. He enjoys complex problem solving, spreadsheets, and expanding his knowledge in various financial avenues.

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