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It used to be that most people would apply for Medicare and Social Security at the same time – at age 65.  But now that the full retirement age for Social Security is increasing, more people are becoming eligible for Medicare before they reach full retirement age.  It is important that you pay attention to your Medicare eligibility.

The Medicare Trap

You must take the initiative to apply for Medicare when you turn age 65, or you will be penalized.  The penalty is substantial:  you will be charged an extra 10% for your Part B Medicare premiums for every year that you remain uncovered after you are eligible.  If you wait 2 years, you will be charged 20% extra for the rest of your life.  However, there are exceptions:

Exception for Early Social Security

The most common exception is for people who are already receiving early Social Security at age 65 – in other words, they applied early and are receiving reduced benefits.  If you started Social Security early (before full retirement age, e.g. age 66) you will be automatically enrolled in Medicare at age 65 and the premium will be subtracted from your Social Security.

Exception for Employer Coverage

The other common exception applies to people who are still working at age 65 and are covered under their employer’s health insurance plan.  They are exempt from the penalty if they apply for Medicare when their employer’s coverage terminates or becomes secondary to Medicare.