Retirement Now Newsletter December 9th, 2021.
Two days ago was the deadline for making any changes to Medicare prescription drug plans or Advantage Plans, under the annual election period.
There are some exceptions to this deadline of course, like for people that become eligible for Medicare during other times of the year… they can sign up for drug plans or Advantage Plans.
Or if you move to a new area where there are different plans available you may have a special election period to change mid-year.
But once you are no longer new to the Medicare system, your choices each year follow a certain time schedule.
And most of us are familiar with the one that ended two days ago on December 7th.
There’s a more obscure deadline that doesn’t apply to most people. But I came across an article where one woman was hit pretty hard due to not understanding how Medicare works. This doesn’t happen to many people, but I thought it might be a good word of caution if you have group employer coverage when you turn 65. Or even if you know someone that does.
The article describes how a lady was covered under a group health plan when she turned 65, so she didn’t sign up for Part B Medicare. Which by the way is usually a good decision and Medicare will not penalize someone for delaying signing up for Part B if they are on a group plan. In fact, when a person comes off the group plan they have the ability to activate their Part B at that time regardless of what time of year it is.
But then her group plan became COBRA and she kept that coverage instead of signing up for Part B.
And if you have COBRA it means you (or your spouse) have separated from working for the employer. She kept the COBRA for 18 months, then tried to activate her Part B Medicare, and she wasn’t able to at that time. She had to wait until the next enrollment period of Jan 1st thru March 31st. And even then her Part B wouldn’t become effective until July 1st.
And she’ll probably have to pay a late enrollment penalty forever too.
Losing group insurance coverage gives a person an option to activate their Part B, regardless of time of the year. But losing group COBRA coverage does not.
So she goes without outpatient coverage and it has cost her a lot of money so far.
This is definitely one of those obscure rules hidden in the depths and bowels of Medicare’s enrollment fine print.
And I’ve never personally seen anyone run afoul of it.
But it can happen.
And it very well illustrates how a lot of times people are left high and dry on the information they need about Medicare when they leave their employer and need different coverage. And it’s also why it’s so important to have an insurance agent who is well versed in how the system works for that matter.
A more common mistake I’ve seen is a person on group health insurance coverage turning 65 and activating their Medicare Part B.
This is often times a bad idea.
Mostly because you have to pay for Part B ($170.10/month in 2022). And if you are already paying for your group health insurance, why pay more?
Also because depending on your health at that time you may not be able to get the supplement that you want. Like if you wanted a Plan N supplement, you are not guaranteed to get it if you can’t pass the health underwriting cases. But other supplements may be available on a guaranteed issue basis regardless of your health when you lose group insurance.
It’s typically better just to activate your Part B to coincide with when your group health insurance runs out. Then you can use your guaranteed issue rights under the 6-months time window rule from when your Part B started. So you’d also be guaranteed to get a Plan N, if that’s what you wanted.
It can get a little complicated as you can see.
And if that sounds all new to you, that’s because most people are flying blind on how to coordinate their group health plan, or more accurately the transition from their group health plan to Medicare, smoothly.
Especially if they can’t find someone that is knowledgeable about how the system works.
Remember, Medicare is just one part of a sound retirement plan. And if you need help with your retirement or getting prepared for it, feel free to click here an dbook a chat with me to discuss.