How To Time Your Enrollment In Medicare

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ObamaCare could have a big impact on the future of Medicare, but the Affordable Care Act shouldn't affect decisions now on when to take the social insurance program for those who are still working.

Experts argue that ObamaCare's new taxes and fees won't pay for all of Medicare's bells and whistles and will hasten the program's insolvency. These issues will be hashed out. In the meantime, you still need to decide whether your employer's plan or Medicare gives you the best deal.

The decision is easy if you aren't covered by a plan at work: Enroll.

If you are still working at 65, you may be covered by an employer plan, which can provide benefits that Medicare can't such as covering other family members.

If you're still working, enrolling in Medicare Part A, which covers hospital bills, can cover medical costs that your group plan does not. Part A is free for most seniors.

Under Medicare rules, a plan that covers 20 or more workers is large and will provide your primary coverage for hospital costs.

If you're in a small group, the situation is reversed. Medicare will be the primary coverage while your group insurance is secondary.

Your employer's HR person may help you compare coverages.

If you sign up for Part A of Medicare, you don't have to take Part B as well. Part B covers doctors' bills and other medical expenses.

If you sign up for Part B, you'll pay a monthly premium. The standard 2013 cost is $104.90 a month.

Who Pays Extra?

Seniors with modified adjusted gross income over $85,000 pay extra for Part B. So do couples filing a joint return with MAGI over $170,000. The MAGI that counts goes back two years. So your 2012 MAGI will determine the Part B premium for 2014.

Those higher Part B premiums range from $146.90 to $335.70 a month in 2013. The amounts may rise annually.

So you might not want to take Part B if you're still covered by a group plan. Declining Part B works best if you are in a large group, because your group plan is your primary coverage, as mentioned above.

If you're in a small group, Medicare becomes your primary coverage. If you decline Part B, you will have no primary coverage.

"People in small groups generally should sign up for Parts A and B at age 65," said Erin Ackenheil, vice president of sales at WellPoint.

For all Medicare enrollees, delaying Part B can be risky. The normal enrollment period runs from three months before the month you reach 65 to three months later.

If you enroll after that and in that period you weren't covered by a group health plan, your lifelong Part B premiums will be 10% higher for each full year you delay.

But seniors covered by an employer's plan can sign up for Part B, penalty-free, for up to eight months after losing employer coverage.

This break applies only to regular employer health insurance. If you have COBRA or retiree insurance, higher lifelong premiums will kick in once you pass the normal enrollment period.

Rules for Part D, which deals with prescription drugs, are similar to those for Part B. You can decline Part D,if you'd rather not pay for it. This year the average premium is $31 a month.

Late enrollment has a penalty. It's waived if you sign up for Part D within two months of losing employer coverage.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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