April 20, 2017

You Can Avoid Common Medicare Part B Mistakes—Here’s How

By Charris Nelson, Certified Senior Advisor, Marcum Insurance

You Can Avoid Common Medicare Part B Mistakes—Here’s How

Medicare Part B insurance covers supplies and services that are medically necessary to treat a person’s health condition. This can range from preventive services, outpatient care and ambulance services to medical equipment, part-time or intermittent home health and rehabilitative services (e.g., physical therapy) and more.

Applying for and utilizing Medicare Part B insurance can be confusing for some, and consequently, many related mistakes are common. If you utilize Medicare Part B insurance, you shouldn’t pay a penny more than you need to when you enroll in Medicare coverage.

While I recommend each individual consult Medicare and/or a knowledgeable professional before enrollment, below are common scenarios and important factors that may be helpful in avoiding costly mistakes:

You are still working when you turn age 65 and become eligible for Medicare. You sign up for Part A by calling Social Security. Part B is optional and depends on how many people work at your company. Even if you are drawing Social Security at age 65 (and enrollment is automatic), Part B is still optional; therefore, you may be able to choose to postpone enrollment if you are continuing to work.

If you work for a business or organization with 20 or fewer workers and you have health insurance, you should sign up for Part B, which covers doctor bills. The fee for Part B in 2017 is $134 per month for workers who earn $85,000 a year or less ($170,000 for a married couple), and it can range as high as $428.60 per month for higher income earners who make over $214,000 per year ($428,000 for a married couple). Medicare will be your primary insurance provider, and your coverage from work will be secondary.

If you work for a company that provides health insurance and has more than 20 employees, its coverage continues, and you don’t necessarily need to enroll in Part B.

However, you must enroll when your status at the company changes. You must enroll in Part B within eight months, or you face a penalty—namely, a higher Part B premium for the rest of your life.

What are the status changes that trigger the possible penalty?

  • If you retire, you must enroll in Part B, whether or not the company has retiree coverage.
  • If you get laid off and file for COBRA in order to continue your health insurance, you still have to enroll in Medicare Part B.
  • If you had coverage at the company through your spouse, and your spouse gets laid off, you can continue health coverage through COBRA, but you must file for Medicare Part B. The same rule applies if you got divorced and are keeping coverage through COBRA; you still need to enroll in Part B.

Too often, I see examples of people who have been enrolled in Part B while they are still on their employer coverage—and yet Medicare Part B enrollment was not necessary because the employer plan remained primary. This costs, at the very least, an extra $134 per month, and that extra cost could go as high as $428.60 per month for higher earners. A high-wage earner could be looking at an unnecessary annual Medicare Part B payment of $5,143.20.

Here’s a recent example of that: A client did not seek Medicare advice at age 65, but rather, at his retirement age of 68. He made the incorrect assumption that he needed Medicare Part B at age 65 and has paid three years of high-income Part B premium payments, which is estimated to be about $15,000 from age 65-68 at 2017 premiums. Since his employer had over 20 employees, he could have waited to enroll in Part B at the time of retirement and employer coverage termination, saving him the $15,000 altogether. Unfortunately, there is no reimbursement of overpaid premium payments for such a mistake.

Do you have questions about Medicare Part B? Please contact Charris Nelson, Certified Senior Advisor, Marcum Insurance.