I recently read an article by Anne Tergesen of the Wall Street Journal that demonstrated a clear misunderstanding of your rights when enrolling in Medicare if you decided to work past the age of 65: "Retirees Snared by Medicare, As People Work Longer they Risk Penalties for Missing Medicare Deadlines." 

Technically she is correct, if you plan to postpone enrollment in Medicare Part B and Medicare Part D - you may face some stiff penalties if you are not aware of the rules. You may even face being uninsured.  Since she decided to sensationalize a few examples where people where misled, I felt it was important to be absolutely clear, if you plan to work past the age of 65 and continue to receive health insurance from your employer - you will NOT be penalized by Medicare when you are ready to retire and enroll in Medicare.

Error #1: Older Adults Can't Get Into Medicare Anytime They Want

I'll be the first to admit, Medicare enrollment rules are complex - Initial Election, Annual Election, Open Enrollment and Special Enrollment periods are all extremely confusing.  Each are designed to help provide retirees with opportunities to enroll in a Medicare Advantage Plan or a Medicare Supplement based on their "retirement age" and/or "loss of coverage from an employer".  There are also certain times of year that allow retirees to "add more" or "less" coverage based on special circumstances, medical or financial needs.  Lets make one thing absolutely clear - you have plenty of time to enroll in Medicare before you turn 65, at 65 and if you plan to keep on working past the age of 66.

Turning 65 - 7 months to make a decision

When you turn 65 and annually thereafter you will receive a copy of "Medicare & You" from the Center for Medicare and Medicaid Services. Neither Social Security nor Medicare will contact you - you must contact Social Security when you are ready to enroll in Medicare.  If you decide to retire at the age of 65, Social Security advises people to file for Medicare benefits 3 months before you turn 65. You also have the option to enroll 3 months after you turn 65 as well (7 month window of opportunity). Remember, Medicare benefits can begin no earlier than age 65. You will receive a Medicare card about two months before age 65. (Note: Residents of Puerto Rico or foreign countries will not receive Part B automatically. They must elect this benefit.)

Tip: If your spouse is still working and you want to delay enrollment in Social Security and Medicare you can do so without penalty as long as you are covered under your spouses Employer/Union sponsored health plan. 

Common Trap or Penalty: However, because you must pay a premium for Medicare Part B coverage, you have the option of turning it down. If you turn Medicare Part B down and are not covered under an Employer/Union sponsored health plan you will pay a 10 percent monthly premium penalty for each 12 month period you could have enrolled but did not. 

Error #2: Problems transitioning from Employer Coverage into Medicare

You can wait to sign up for Medicare Part B – without penalty – if you or your spouse are working and have group health coverage based on that work or if you are disabled if you or your spouse are working and have group health coverage based on that work.  If you would like to file for Medicare Part A and B, you can apply by calling Social Security at 1-800-772-1213. Their representatives can make an appointment for you at any convenient Social Security office and advise you what to bring with you.

Still Working Past Age 66 - 8 months to make a decision

If you are still working into your retirement and lose your employer coverage – you can still join a Medicare Advantage plan, in most cases, you won’t have to pay a penalty, as long as you join during the 8-month period that begins when the month your employment ends or the group health plan coverage ends, whichever happens first.

Common Trap or Penalty: If you delay enrollment in Medicare Part B and are not covered by your Spouses insurance, Medicare will make you wait until January 1 through March 31 of each year to enroll in Medicare Part B. During this time period, Medicare permits people 65 or over who failed to enroll or dropped their Part B Medicare coverage to sign up. Your coverage will not be effective until July 1. This means you will NOT HAVE ANY health insurance during this 7 month time period and you are responsible for the full cost of your health care.

Don't be misled about your rights under Medicare

While the Wall Street Journal article is generally confusing, there are some important examples of people who were misled.  Employers, Social Security and Medicare really need to do a better of educating retirees about the risks of taking COBRA, private insurance or remaining uninsured after your employment ends.  Not doing your homework could have catastrophic financial results.

About the Author:

My name is Dana Cutter and I am Founder and Editor of Medicare Sherpa. Our staff spends their days searching the Internet for the best content and advice on retirement.  On our site you will find articles on Social Security, Medicare Benefits, Prescription Drug Benefits and more. Please feel fee to send me an email with ideas for content, site improvements or general help launching your online persona. I hope you will consider joining and I am looking forward to reading more about you online.

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