If you are age 65+ and you or your spouse is still employed and receiving quality group health coverage, you may not be thinking too much about Medicare. However, once retirement is on the horizon, it is critically important to make sure you understand Medicare’s strict enrollment criteria to avoid a gap in coverage and prevent penalties.
Most individuals sign up for Medicare Parts A and B during the 7-month period when they turn 65, including the 3 months before, during and after their birth month. If you are covered under a group plan based on active employment, you can sign up anytime as long as the primary plan member is still working. Once you or your spouse retires, you have an 8-month Special Enrollment Period to obtain Part A and/or Part B (penalty free) beginning at one of these milestones (whichever occurs first):
The month after employment ends
The month after group health insurance based on current employment end
Based on ease of administration or cost, it may be tempting to switch to COBRA coverage before changing over to Medicare. Do not! COBRA and retiree health plans do not qualify for the Special Enrollment Period. These plans are not considered employer healthcare coverage, and If you miss the 8-month period outlined above, you will have to wait until the regular Open Enrollment Period January 1 – March 31 to sign up. As a result, your coverage will start July 1, potentially causing a gap if your other coverage ends sooner, and likely resulting in a lifetime Part B late enrollment penalty.
With Medicare, of course, there are always exceptions and special circumstances. We have worked with individuals and couples in every situation, but advanced planning is important! For peace of mind and optimal coverage in your retirement years, consulting with us well in advance of this milestone will help ensure a smooth transition from group insurance coverage to a Medicare plan that’s right for you.