Q&A: How to avoid the costly Medicare mistake that too many people make

Dear Liz: My husband retired last year at 74. He had originally signed up for Medicare Part A and Part B. But during his employment, he cancelled Part B because of the company’s private health insurance. When he retired, we used COBRA to continue that insurance coverage for our family. (I’m not Medicare eligible, and we have a son.) Our COBRA coverage ends in a few weeks.

My husband was told he has to wait until January 2019 to enroll in Part B and will not have coverage until July 2019. He is ineligible for VA benefits and has costly medical expenses. I was able to get an Obamacare plan because coming off COBRA triggers a special enrollment period for me, but he cannot get coverage because he is Medicare eligible.

What a dilemma. No one told us when he retired that he should get back on Part B right away and not take the COBRA offered. Now, when he does get Part B, he will also pay a 20% premium penalty each month for life. We are shocked that the system works like this. Any ideas how to get out of this mess?

Answer: Your husband isn’t alone in misunderstanding the importance of signing up for Part B after retirement. Unfortunately, there’s probably no remedy.

For those who don’t know, Medicare Part A is the hospital coverage that’s provided to people 65 and older. They don’t pay premiums for this coverage. People do, however, pay premiums for Medicare Part B, which covers doctors’ visits and other medical costs. Those who are still working and covered by an employer’s plan often forgo Medicare Part B. Once their employment ends, though, they’re expected to sign up for Part B within 8 months or they pay a 10% premium for every 12 months they failed to sign up. They also have to wait for the regular Medicare enrollment window to roll around, which can leave them exposed to some hefty medical bills in the meantime.

“This is the biggest mistake people make and seriously this rule needs to be changed,” says Carolyn McClanahan, a physician and certified financial planner in Jacksonville, Fla.

There is a process known as “equitable relief” that allows people to request immediate enrollment and the waiving of the penalty, but you have to prove that the failure to enroll was the result of “error, misrepresentation or inaction” by a federal employee or anyone authorized by the federal government to act on its behalf, according to the Social Security Administration. So it’s not enough to inadvertently make a mistake. You have to prove you were misled. You can read more here: https://www.medicarerights.org/PartB-Enrollment-Toolkit/Equitable-Relief.pdf