Critical Steps for Medicare Participants

Written by Firethorn Wealth Partners

May 21, 2021

This month’s newsletter will be directed at a smaller audience than normal. Specifically, our clients ages 50- 65. We are going to address the process and perils of becoming eligible and applying for Medicare! How exciting! Healthcare is one of the biggest financial planning concerns for us as planners and you as clients. The costs are rising much faster than the inflation present in the overall economy. Making a mistake in the Medicare enrollment process can result in permanent and costly premium penalties.

Anyone that is already receiving their Social Security retirement benefits upon turning 65 is automatically enrolled in Medicare. Everyone else must initiate enrollment on their own. Your initial enrollment period for Medicare is during a seven-month window that includes the three months prior to the month of your 65th birthday, the month of your birthday, and the three months following your 65th birthday. Please note that the Social Security Administration does not notify people approaching 65 of the eligibility window. It is up to you. Coverage will typically begin one to three months after you enroll.

What happens if you miss this seven-month window? You wait. You wait for the General Enrollment Period that begins each January through the end of March. Your coverage then begins on July 1. However, the recently passed BENES Act changed the rule for coverage to begin the month after you enroll. This new rule begins in 2023. The penalties for failing to apply in that initial seven-month window are calculated at 10% of the standard Part B premium ($148.50 monthly for 2021) for each 12 months of delayed enrollment. This is double for married couples where both fail to apply on time.

There are many nuances to this journey. One is for those still employed and their spouses covered by insurance through their employer. They are eligible for a special enrollment period after retiring. COBRA can also complicate this process. Additionally, Part D also has its own, but less severe, penalty calculation formula. Employees of small companies with 20 employees or less must apply when first eligible so that Medicare becomes their primary insurance. The nuances to Medicare enrollment are enough for their own newsletter.

There are 18 different potential retirement healthcare coverage combinations. There are some 48 plans available in the 30904 zip code. Suffice to say it is complicated!

This topic highlights a specific part of the Firethorn client experience as is the case with most of our monthly newsletters. We are implementing a program to reach out to our clients between their 64th and 65th birthdays to consult on their Medicare journey. We also are available to consult on your annual enrollment after you turn 65 and help you reevaluate your coverage. In the meantime and always, reach out to us with any questions. See you next month!