When you turn 65 or retire, you need to sort out your government benefits.  These benefits are Social Security (pension) and Medicare (medical).  I address Social Security in a separate article and here we will talk about Medicare, what it does, how to collect it and some more complicated issues.

The Basics of Medicare

Let’s start with the basics.  You are eligible for Medicare when you turn 65 no matter where you live be it Redding or Lewisboro.

Medicare Planning Lawyer Ridgefield CT

Medicare Basics

It sounds simple but it can get complicated and if you mess up, there are significant costs.

The government couldn’t just give you healthcare.  They have to make it complicated.

There are 3 parts to Medicare.

Part A covers hospital costs and has no premiums.

Part B covers outpatient care, such as doctor visits, x-rays and tests, and generally costs $105 per month in 2015. The Part B premiums are deducted from your Social Security benefits.

Part D covers prescription drugs and generally costs $32 per month.

For those of us living in Connecticut and New York, you need to harmonize your Medicare with your Estate Plan.

Do I Want Medicare

Generally, you want to participate in Medicare as soon as possible because it eliminates your private pay health care and avoids penalties.

In some cases your employer covers your healthcare after age 65 either because you are still employed or they have a retiree plan.  In those cases, you may prefer the employer plan because it is cheaper or has better coverage.

You will almost always take Medicare Part A because it is free, but may want to pass on Medicare Part B and Part D because it costs money.

Enrollment in Medicare

If you enroll in Social Security before age 65, you’ll automatically be enrolled in Medicare Part A and Part B when you turn 65.  If you don’t want to be enrolled, you have to take action.

You’ll receive your Medicare card in the mail three months before your 65th birthday. If you don’t want Part B yet, you can send back the card and have it reissued for Part A only.  However, you can’t turn down Part A if you’re enrolled in Social Security

If you haven’t claimed Social Security benefits at 65 because you are not yet eligible or you are delaying it, enrollment in Medicare isn’t automatic. Therefore if you don’t have employer health coverage, you should sign up for both Medicare Part A and Medicare Part B. Go to to sign up for Medicare three months before or after the month you turn 65–even if you aren’t signing up for Social Security.

If you miss the deadlines, you could have a gap in coverage, miss out on valuable tax breaks, have a penalty for the rest of your life, and can only enroll at specified dates.

If you miss the Part B deadline, you can only enroll during the general enrollment period from Jan. 1 to March 31 each year, with coverage that doesn’t begin until the following July 1.

For Part D coverage, you can only enroll from Oct. 15 to Dec. 7 each year, with coverage beginning Jan. 1.

Figuring out the cost of Medicare

Like everything else the government does, it is complicated.  To decide whether to go on Medicare or stay on an employer’s health plan, you have to figure out all the costs.

So, here are how the costs work in 2015.  You don’t pay a premium for Medicare Part A, which covers hospitalization.

Medicare Part B is generally $105 per month in 2015.  But, single enrollees earning more than $85,000 and married enrollees filing jointly and earning more than $170,000 will pay $147 to $336 per person per month.

Part D averages $32 per person (plus a high-income surcharge that boosts premiums by $13 to $71 per person if income is above $85,000 for singles or $170,000 for couples).

A Medigap policy runs around $180 per month.  (You will also normally want a Medigap policy to help cover co-payments and deductibles, and a Part D drug plan to cover prescription drugs.)

So, when we add all this up the total cost for health insurance which is Part B, Part D, and Medigap will run about $320 per person per month. It can range up to $640 a month or so.  Not exactly free.

One option is a Medicare Advantage plan.  Essentially, Medicare Advantage rolls all this into one plan for one premium.  It has medical and drug coverage through a private network of providers.  You have to pay the Part B premium plus an average Medicare Advantage premium of $34 a month or $140 to $390 per month.

 Employer Coverage and Medicare

If you have coverage through an employer with 20 or more employees, you don’t have to sign up for Medicare when you turn 65.  The employer coverage just handles the health costs.  If you had Medicare, it would be a secondary payer.  That means it is often not worth the cost.

Generally, everyone with employer coverage enrolls in Part A at 65 because it’s free (unless they want to contribute to a health savings account). However, most don’t sign up for Part B to avoid the additional cost for insurance they don’t need. You’ll avoid the lifetime penalty as long as you sign up for Part B within eight months of leaving your job.

If you work for a company with fewer than 20 employees, however, things are a bit different.  You have to sign up for Medicare Part A and Part B at 65 because Medicare is the primary insurer and your employer’s is the secondary.  In other words, you need the insurance.   If you don’t sign up for Medicare Part A and Part B at age 65, you could have coverage gaps and incur the penalty.

Medicare Part A, B or D Late Enrollment Penalty

Crazy Medicare penalizes you if you don’t sign up on time….go figure.  If you don’t sign up for coverage when you’re first eligible or if you drop it and then get it later, you may have to pay a late enrollment penalty.  The way the penalty is calculated is below.

For Part A, the penalty is 10% of the Part A premium. You will continue to pay the penalty premium for twice the number of years you were eligible for Part A but did not enroll.

For Part B, the penalty 10% of the Part B premium.  Your monthly Part B premium will go up 10% for each full 12-month period that you could have had Medicare Part B but did not take it. You will pay this higher premium for as long as you have Medicare Part B coverage.

For Part D, the penalty is 1% of the average monthly prescription drug premium (1% of $33.13 in 2015, or 33 cents) times the number of months you were late.  You will pay this higher premium for as long as you have Part D coverage.

Medicare versus HSA

A Health Care Savings Account or “HSA”, has to be paired with a high-deductible policy, offers tax advantages, and some employers contribute money, too. But you can’t contribute to an HSA after you sign up for Medicare Part A or Part B.

Before you delay signing up for Medicare to continue contributing to an HSA, do a cost-benefit analysis to determine whether the HSA tax breaks, employer contributions and other benefits are more valuable than Medicare.

You can also use HSA money tax-free to pay Medicare Part B, Part D and Medicare Advantage (but not Medigap) premiums.

Who to Call for Help

You can call Social Security at 800-772-1213 to talk about your case and ensure you won’t be penalized for enrolling late in Part B.

You can also get help with Medicare Issues from the Medicare Rights Center (; 1-800-333-4114).