Retiring past age 65? How to avoid costly Medicare mistakes

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Nevertheless, once you’re planning to retire from that job, you need to be aware of various deadlines and rules to avoid shelling out more for premiums than necessary.

As long as your employer-sponsored health care is considered qualifying coverage (called “creditable”), you can avoid paying a penalty for having delayed Part B signup — although you must enroll within eight months of stopping work.

Ideally, however, you should coordinate the end of your work-sponsored coverage with your Medicare effective date so you don’t find yourself without insurance.

If you were to be subject to the late-enrollment penalty for Part B, it would be 10 percent per year that you should have been signed up but were not. The amount would be life-lasting and tacked on to your premium.

Be aware that when you retire, if for some reason you end up continuing your workplace health plan under COBRA — a law that allows you to continue the coverage for a set time if you pay the full premiums — Medicare doesn’t consider that coverage creditable. Same goes for insurance through your ex-employer after you retire.

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For Part D prescription coverage, the late-enrollment penalty is 1 percent for every month that you could have been signed up. People with qualifying coverage through an employer plan don’t face that life-lasting penalty as long as they secure coverage within two months of their other plan ending.

However, once you do enroll, you’ll get a form from the insurance company that needs to be filled out and returned to confirm you were permitted to delay enrollment, Roberts said.

“If you miss that letter and fail to send it back, you’ll get charged the penalty,” Roberts said. “We’ve seen where someone misses it because they get so much mail and accidentally throw it out.

“It can take months to appeal that late penalty.”

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