This Medicare Enrollment Mistake Could Cost You for Years

A lot of people look forward to turning 65 so they can sign up for Medicare. But some people opt to delay their Medicare enrollment well past age 65.

In certain cases, that's not a problem. But depending on your circumstances, waiting to enroll in Medicare could cost you more money for the rest of your life. So it's important to know the rules.

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The problem with waiting too long to sign up for Medicare

Most Medicare enrollees do not pay a monthly premium for Part A, which covers hospital care. Part B, on the other hand, comes with a monthly premium that can rise from year to year.

Seniors who are enrolled in Social Security pay their Medicare Part B premiums directly from their monthly benefits. Enrollees who haven't started collecting Social Security have different payment options.

Your initial window to enroll in Medicare starts three months before the month you turn 65 and ends three months after that month. So all told, you have seven months to enroll.

If you miss that window, you'll have other opportunities to sign up for Medicare down the road. But you may also end up getting stuck with lifelong surcharges on your Part B premiums if you wait too long to enroll.

Specifically, your monthly Part B premiums can increase by 10% for every 12-month period you were eligible for Medicare but didn't enroll. That could end up being a very costly mistake if you have a lengthy retirement.

Why far too many people make the mistake of enrolling late

A big reason some older Americans make the mistake of enrolling in Medicare late is that they don't quite understand what happens if they're still working and have employer coverage.

If you're covered by a qualifying group health plan at the time of your initial enrollment window (which usually means a plan with 20 or more employees), then you're eligible for a special enrollment period for Medicare that begins once your employment or group health coverage ends. But the rules may be different if your coverage comes from a small employer with a small group health plan, or if you have your own health coverage you buy yourself.

In a nutshell, you need to make sure that you qualify for a special enrollment period for Medicare based on your health insurance plan if you'll be delaying your enrollment beyond that initial seven-month window. If you aren't eligible, you risk lifelong surcharges on your Part B premiums, which can be expensive enough with that penalty.

This year, for example, the standard Medicare Part B premium is $202.90. And it's likely to keep rising. Paying more on top of that could strain your retirement finances.

For this reason, it's crucial to take the time to understand how Medicare enrollment works. And if you're inclined to delay your enrollment due to having health coverage already, make sure your plan gives you the options you think it does.

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