The Medicare Enrollment Mistake That Could Haunt You for Life

A lot of people know that age 65 is generally when Medicare eligibility kicks in. And you might assume that you should sign up for coverage on your 65th birthday.

You could do that, but you don't have to. Your initial Medicare enrollment window spans seven months. You can enroll up to three months before the month of your 65th birthday or up to three months after without having to worry about being late.

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But if you miss that window, you risk subjecting yourself to costly penalties that follow you for the rest of your life. So it's important to know how Medicare enrollment works and when it's safe to delay.

The timing matters

Failing to sign up for Medicare on time could result in Part B premium surcharges. Specifically, your Part B costs will rise 10% per year-long period you could've had coverage but didn't enroll.

That's why it often pays to sign up for Medicare during your initial enrollment window. The exception, however, is if you're still working. In that case, delaying enrollment could make sense, but only if you qualify for a special enrollment period that leaves you exempt from the aforementioned penalty.

It's that special enrollment period that tends to trip people up, though. If you're enrolled in a qualifying group health plan, you can generally get a special enrollment period for Medicare. But not every group health plan qualifies.

You're typically safe if you're employed and are enrolled in a workplace plan with 20 or more employees. But if you work for a smaller employer, your plan may not qualify. Similarly, individual health insurance plans, including those bought on the ACA exchange, generally do not count as active group employer coverage.

For the record, neither does COBRA, which allows you to retain your workplace plan for a period of time after separating from your employer. While COBRA is technically a continuation of your former employer's group health plan, Medicare requires your coverage to be tied to active employment to qualify for a special enrollment period.

Understanding these nuances is key. If you think you're eligible for a special enrollment period and aren't, you might delay Medicare and end up having to pay more for Part B for the rest of your life. So it's important to understand your options carefully.

Don't get stuck paying more

Healthcare is expensive enough in retirement without having surcharges tacked onto your Medicare premiums. You don't necessarily need to sign up for Medicare during your initial enrollment window. But make absolutely sure you qualify for a special enrollment period before deciding to wait.

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