Q&A: Avoiding Medicare late enrollment penalties

Dear Liz: I have taken multiple in-person and online educational classes about Medicare prior to my 65th birthday. What I learned from these classes was that the law demands people register for Medicare Part A when we turn 65 whether we are working or not. Like the woman in your column, I also work full time and do not plan to retire until 70 (at least that is my new target date). At the time of my retirement I will apply for Medicare Part B and purchase supplemental insurance.

Answer: It’s wonderful that you made the effort to educate yourself about Medicare, which can be incredibly complicated. However, you got the wrong lesson about what’s required, since there’s no law that forces people to sign up for any part of Medicare, including Part A, which covers hospitalizations and which is typically premium-free.

The reason most people should sign up at age 65 has to do with penalties. People who delay signing up for Medicare Part B, which covers doctor’s visits, or Part D, which covers prescriptions, can face permanent, lifetime premium penalties unless they qualify for certain exemptions. One of those exemptions is having qualifying health insurance coverage from a job, either your own or your spouse’s. You can find more details at https://www.medicare.gov/basics/costs/medicare-costs/avoid-penalties.

Q&A: Switching back to original Medicare

Dear Liz: I’m 75 and I’ve been on an Advantage plan since I started on Medicare at 65. I’m interested in switching to original Medicare with a supplemental policy. I know I will have to enroll in a drug policy also. Will I be subject to any penalties for late enrollment for any of the three policies?

Answer: You won’t be subject to penalties but you will be subject to underwriting for the supplemental policy. That means the private insurance companies that offer these plans can deny you coverage or charge you more for preexisting conditions.

There are a few exceptions. Insurers can’t subject you to underwriting if you’re still within the first 12 months of having a Medicare Advantage plan, for example, or if you move out of the plan’s service area. In addition, four states — Connecticut, Maine, Massachusetts and New York — require Medigap companies to offer coverage to all Medicare beneficiaries.

Start shopping around and make sure your application for a supplemental policy has been approved before canceling your current plan.

Q&A: How to avoid Medicare late enrollment penalties

Dear Liz: I am 65, still working and have health insurance through my employer. I have not enrolled for Medicare and have been told I do not need to. I plan to once I retire. There is a passage in my Social Security statement that says, “Because you are already 65 or older, you should contact Social Security to enroll in Medicare. You may be subject to a lifetime late enrollment penalty. Special rules may apply if you are covered by certain group health plans through work.” I have tried to research further through the Medicare website but can’t find a clear answer about whether or not I am OK not enrolling at this time.

Answer: If your employer has 20 or more employees, then you’re fine for now. When you stop working for that employer, you’ll have eight months to sign up for Medicare without owing penalties.

If you want your Medicare coverage to start when your job-based coverage ends, though, you should sign up a month before you retire. Similar rules would apply if you were covered by a spouse’s workplace health insurance plan. As long as your spouse is still working for the employer that provides the coverage, you can avoid permanent Medicare penalties.

If your employer has fewer than 20 employees, however, you may be required to sign up for Medicare when you’re first eligible. Check with your employer.

Tuesday’s need-to-know money news

Today’s top story: 7 things Medicare doesn’t cover. Also in the news: A new episode of the Smart Money podcast on the cost of eggs, where small businesses are feeling inflation most, and the No. 1 hotel amenity people love might surprise you.

7 Things Medicare Doesn’t Cover
From dental cleanings to overseas health care, here’s what you’ll have to cover on your own.

Smart Money Podcast: What’s Up With Eggs, and Home Improvement Projects
This week’s episode starts with a discussion about eggs — why they’re so expensive right now and how you can adjust your shopping habits.

Here’s Where Small Businesses Are Feeling Inflation Most
Consumers aren’t the only ones with rising prices. Small businesses are battling inflation and supply chain delays.

The No. 1 Hotel Amenity People Love Might Surprise You
It seems everyone’s ready to kick back by the pool this summer.

Q&A: Revisiting a Medicare penalty

Dear Liz: As a county employee of 44 years, I was offered the option to contribute to Social Security in the mid-1970s. It was not mandatory and I declined. When I retired in 2004, I did not apply for Medicare as I wrongly assumed that I would not qualify. I have since learned that I can apply for Medicare but that I would have to pay $499 per month as a late enrollment penalty on top of the monthly premium. Do you know any way that I can get a portion of the late penalty waived?

Answer:
As your situation shows, not getting sound advice about Medicare can be expensive. Failing to sign up for Part B coverage, which pays for doctor’s visits, can incur penalties of 10% for each 12 months you were eligible but didn’t enroll. The penalties are typically permanent.

There is an appeals process, but your chances of success may not be great unless you can prove that you delayed enrollment because of bad advice you got from a government representative. Medicare has more information on its site.

Friday’s need-to-know money news

Today’s top story: How to get what you want at your next job. Also in the news: Medicare to offer free at home COVID-19 tests in early spring, how your parents’ debt could outlive them, and what you need to know before you claim your child tax credit this season.

How to Get What You Want at Your Next Job
Before you start polishing your resume, here are tips from career coaches on being strategic with your job search, preparing for negotiations and asking for what you want.

Medicare to Offer Free At-Home COVID-19 Tests in Early Spring
Members will be eligible for eight free over-the-counter tests per month through local pharmacies.

How Your Parents’ Debt Could Outlive Them
Should you fear ‘filial responsibility’ laws?

What You Need to Know Before You Claim Your Child Tax Credit This Filing Season
The child tax credit was expanded up to $3,600 for the 2021 tax year. Here’s how to claim yours.

Monday’s need-to-know money news

Today’s top story: How to avoid going overboard and over budget on kids’ holiday gifts. Also in the news: A new episode of the Smart Money podcast on countering uncertainty and building wealth early, Medicare and prescription drug costs, and what you need to know about Medigap Plan D.

Avoid Going Overboard and Over Budget on Kids’ Holiday Gifts
To avoid overspending this year, find a gifting strategy that works for your kids and your budget.

Smart Money Podcast: Countering Uncertainty, and Building Wealth Early
Sean and Liz discuss how to counter uncertainty, and respond to a young listener’s question about building wealth.

Does Medicare Cover Prescription Drugs?
Original Medicare beneficiaries can buy prescription coverage called Part D. Medicare Advantage plans usually include coverage.

What Is Medigap Plan D? What You Need to Know
Medigap Plan D helps Medicare enrollees with some costs not covered by Medicare Part A and Part B.

Monday’s need-to-know money news

Today’s top story: Cash back, miles, or…wine? Credit card rewards are evolving. Also in the news: A new episode of the Smart Money podcast on why you should question your bills and how to make the most of a raise, Medicare’s telehealth experiment could be here to stay, and the best way to ask for a cost-of-living increase.

Cash Back, Miles or … Wine? Credit Card Rewards Are Evolving
If cash back and travel feel blah, a new crop of credit cards will reward you in different ways.

Smart Money Podcast: Why to Question Your Bills, and Making the Most of a Raise

Medicare’s Telehealth Experiment Could Be Here to Stay
An astronomical increase in telehealth visits by Medicare beneficiaries in 2020 could prompt a reshaping of post-pandemic rules.

The Best Way to Ask for a Cost-of-Living Raise
Inflation rates are the highest they’ve been in 30 years.

Friday’s need-to-know money news

Today’s top story: Medicare’s telehealth experiment could be here to stay. Also in the news: 4 best practices to simplify your small business, how Omicron could impact your travel, and 7 things to buy early this holiday season.

Medicare’s Telehealth Experiment Could Be Here to Stay
An astronomical increase in telehealth visits by Medicare beneficiaries in 2020 could prompt a reshaping of post-pandemic rules.

Can’t Keep Up? 4 Best Practices to Simplify Your Small Business
These best practices can help small-business owners simplify daily operations, free up time and focus on company growth.

Omicron, Travel Bans and How They Could Impact Your Trip
As countries rush to impose travel bans amid the omicron COVID-19 variant, here’s what you need to know.

7 Things to Buy Early This Holiday Season
Between limited inventory and shipping delays, here’s what you need to buy early this holiday shopping season.

Friday’s need-to-know money news

Today’s top story: 4 reasons to shop Small Business Saturday. Also in the news: Substantial Medicare coverage for mammograms and breast cancer surgeries, therapies and prostheses, and PlayStation and Xbox consoles in short supply in 2021.

4 Reasons to Shop Small Business Saturday
In a time marked by widespread supply chain disruptions and inflation, underdog small businesses deserve our attention.

Does Medicare Cover Mammograms and Breast Cancer Treatment?
Medicare offers substantial coverage for mammograms and breast cancer surgeries, therapies and prostheses.

Will You Find PlayStation and Xbox Black Friday Deals in 2021?
Retailers will have PlayStation and Xbox consoles in short supply, if at all.