Mac’s Blog

Wall Street Journal 12.30.10 front page provided an article by Anne Tergesen concerning information all individual considering working past 65 and possibly maintaining current health insurance coverage rather than obtaining Part B of Medicare should have.  In case you do not know, you must apply for Part B of Medicare Coverage as opposed to part A which is automatic if you qualify.  You may apply 3 months before or 3 month after turning 65 and once you apply you’re covered the first of the following month.  A fact I did not know is Medicare is effective the 1^st of the month you turn 65, if you apply the month before.  Another fact I was unaware of is my Health Insurance changed when I became covered or qualified for coverage and only paid what Medicare part A & B did not pay.  Even more disturbing, if I did not apply my insurance did not cover me at all until I had effective coverage.  In my case I applied on my birthday the 14^th of December and then found out I had had no coverage as of the 1^st of December and would not until the 1^st of January.  Do not make this mistake, it can be expensive!

 I digress from interest in the article from Ms. Tergesen.  Ms. Tergesen points out, if you’re already collecting Social Security enrollment is automatic (part A) but if you are working beyond this age and staying with your employer’s plan your options become quite limited concerning part B.  The point is you cannot sign up for Medicare just anytime there are strict enrollment deadlines and if you miss them you will not have the coverage you think you have and you may have to pay a fine for life.

 Missing dead lines means you cannot sign up until the next open enrollment period, January and Medicare coverage does not become effective until the following July.  In addition to not obtaining effective coverage you also face a penalty of 10% additional cost’s for the rest of your life.  A real benefit of the article is a Medicare Enrollment Deadlines chart.

 Ms. Tergesen, explains based on the type coverage you have and number of employees covered by the health insurance provided, you may or may not be able to keep your current coverage even though it still may be available.  In a nut shell, the rules are these:

1. Initial enrollment period; A period spans seven months, three before the month of your birth and three month after.
2. Special enrollment period; within eight months after you stop working!  (Pay Attention)  This means after you stop working if you go on COBRA and wait until COBRA runs out 18 months to 3 years you have fail to comply with an enrollment rule and you will wait until January to enroll, you will wait until July for coverage to start and you will pay at least 10% penalty for the rest of your life.
3. General enrollment period; January to March 31 for those who have not enrolled at the proper time or those wanting to change their plan, such as enrolling in an Advantage Plan or changing from an Advantage Plan.
4. Annual election period; November 15 to December 31 if you did not enroll in a Medicare plan with drug coverage during your initial enrollment period.
5. Medicare Advantage open enrollment period; January to March 31^st for those who want to join, drop or change a Medicare Advantage plan.

If you do not comply with these rules and you have significant reason as to why you did not, you may apply for “equitable relief”, a legal protection that allows for immediate enrollment without penalty.  However, this process is not easy, is not cheap and is not quick.

The bottom line is you should enroll for Medicare Part B and perhaps part D (Pharmacy Benefit) when you continue to work and have coverage through a current or former employer;

1, because work place coverage becomes secondary to Medicare for retires at age 65.

2, if the employer has less than 20 employees.

3, you are currently covered by COBRA

4, you have personal health insurance.

You are not required to convert if your employer has more than 20 employees on the plan.  If this is the type plan you have, the policy remains primary and you do not need to convert.  The key here is 20 employees on the policy or a total of 20 with those included that could be insured but wavered out.

Cost of Part B, 2010 is $110.50 per month, which is an increase of $14.10 per month over premium of 2096.  This is a base premium and can and will be increased at incomes above $85,000 for individuals and $170,000 for married couples filing joint tax returns.

For additional information, questions or comments call 888 270 9870 or email hmcminn@plannedassets.com.  Additional and significant retirement information is available at www.plannedassets.retirerx.com

Huber McMinn Jr. (CLU/ChFC) is a Retirement and Estate Specialist in practice for over 29 years in New York City and now the Houston, TX area USA.