Recently retired or retiring soon? Deciding what to do with your health insurance coverage can be a challenge, but we’re here to help. The following information is important to consider when planning retirement, and how to insure your healthcare needs.
Q. What are my options for healthcare coverage when I retire?
A. Your previous employer is required to provide you with a COBRA option to continue your health plan for a specified period of time, but enrolling onto a COBRA plan if you are eligible for Medicare may result in your being charged a penalty along with other potential issues. It is important that you understand how your Medicare benefits and coverage options work.
Q. Should I accept COBRA and delay Medicare enrollment?
A. If you are Medicare eligible when you retire, you receive a Special Enrollment Period (SEP). The SEP allows you to enroll in Medicare Part B and Part D once you lose employer-sponsored coverage. The SEP lasts for a total of sixty (60) days from the date you lose coverage as an active employee of your employer. Individuals who enroll in Medicare during this SEP will not face any restrictions.
Q. What is the Late Enrollment Penalty?
A. Those who do not enroll timely onto Medicare be delaying or enrolling onto COBRA instead will face a permanent penalty which will be added to their coverage costs.
Part B Late Enrollment Penalty*:
Your monthly premium for Part B may increase by 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it.
Part D Late Enrollment Penalty*:
Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($34.10 in 2016; $35.63 in 2017) times the number of full, uncovered months you didn’t have Part D or creditable coverage.
*This is a lifetime penalty, so if it applies to your situation, you will be required to pay this increased premium every month for the rest of your life.
Have more questions?
Here at Henderson Brothers, we want to provide you with the best and most accurate information available. You have the right to be correctly informed about your options, and we want to ensure that you are able to make the decisions that are best for you and your family. Please feel free to reach out to us if you have questions about your coverage or need assistance to find a new policy. We are licensed agents with expert knowledge who are ready to serve you. We look forward to hearing from you!
Please note that the information contained in this posting is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company’s needs. This post should be reviewed by your legal counsel or tax consultant before use.