The hand-off from employer health insurance to Medicare can be one of the trickiest challenges you
will face in managing your retirement. The rules are full of pitfalls that can cost you thousands of dollars in unnecessary premiums or lead to a risky gap in coverage.
Here are the six most frequent questions I get about the work-to-Medicare transition:
1. Is the Medicare enrollment process automatic? A: Only if you have already claimed Social Security benefits by the time you turn 65, which is the Medicare eligibility age. If not, Medicare requires you to sign up in a seven-month window before and after your 65th birthday, unless you have employer coverage or through your spouse.
Failing to sign up when required is costly. Monthly Part B premiums, which cover doctor visits and medical supplies, jump 10 percent – lifetime – for each full 12-month period that you should have been enrolled. Penalties also are applied for late enrollment in Part D (prescription drugs).
If you retire after 65, you can take advantage of an eight-month special enrollment period that begins the month after employment ends.