As the year draws to a close those of us in the accounting profession will start to bombard you with reminders and recommendations to prepare for the inevitably hectic tax season. These will all be very important items to consider but we wanted to make sure that you are thinking about more than just taxes when you are planning for the new year. Don’t forget to spend quality time with your family this holiday season, remember and help those less fortunate, give back a little to your community, and consider if it is time for you to enroll in Medicare.
Here in the U.S., we spend most of our lives vaguely aware of the existence of Medicare. We know that it is a Federally administered health care program of some sort but we never bother to consider what it really is because it seems so far in the future. Then you somehow go from age 36 to age 65 in the blink of an eye. The time speeds by while you build a career and raise kids (then play with grandkids). You work hard to retire and are comfortable and happy. Medicare slips your mind. You forget to enroll and suddenly you are paying an astronomical penalty. Time just gets away from you.
Medicare Part A provides hospital and skilled nursing facility care. Medicare Part D provides outpatient drug coverage. Medicare Part B, which requires enrollment, covers outpatient medical tests. This includes your typical visits to your general practitioner or a specialist that isn’t included as part of hospital stays. Medicare Part B is what most people think about when they think about insurance.
If, in the coming year, you are considering retirement or you are turning 65 then you should begin to look at your Medicare Part B enrollment requirements. The table below outlines the Medicare Part B enrollment periods. If you are one of the lucky few who were able to retire before turning 65 then first, congratulations, and second, you will want to focus on the Initial Enrollment Period information. If you weren’t quite as lucky or just enjoyed your job so much that you kept working past 65 but are now planning to retire then you should focus on the Special Enrollment Period.
What you want to avoid is the general enrollment period. Typically, if you are enrolling during the general enrollment period it is because you were not aware or forgot that you have to enroll in Medicare Part B. If you are enrolling in the general enrollment period, you will likely be subject to a late enrollment penalty. The late enrollment penalty is 10% of the monthly premium for every full 12-months someone delays enrollment in Medicare Part B. Not only that, once the penalty is assessed then it lasts for the rest of your life. The Centers for Medicare & Medicaid Services reports that on average those subject to the penalty pay 31% more for their monthly premiums which amounts to about $390 a year.
So as the New Year approaches and you pop open your champagne make sure to think about your birthday and your retirement. Make sure you are watching out as Medicare Part B approaches. Before you know it you’ll be retired. You don’t want to have to worry about paying penalties for your Medicare when you could be spoiling your grandkids.