Avoid Medicare’s Trap

The Medicare system, tries to be as accommodating as possible.  However, under all the political spin, Medicare is basically an insurance program.  Like every other insurance program it has rules.  If you do not obey the rules, you will find that you have a problem.

Unfortunately, Medicare’s rules are not the same as the health insurance you had before you retired.  In order to avoid frustration, you need to learn some of the rules.

In the past 3 months I have had 2 clients come to me with problems over Medicare B.  I was able to help 1 of them.  The other my only option was to tell her that she had to wait until next July 1 to get Medicare B.  The goal of this post is to make certain that you do not fall into the same trap.


Both of these ladies were still actively employed when they turned 65.  They enrolled in Part A of Medicare but opted out of Part B when they first enrolled.  It makes perfect sense.  They had group health insurance through their employer.  There was no need for them to also pay Medicare for Part B.

At age 67, their employment stopped and they had to rely totally on Medicare.  This is when they recognized that they had a problem.

Every American who qualifies for Medicare has the 7 months around their birth month, in which to enroll in Parts A & B of Medicare.  That period of time is called your “Initial Enrollment Period.”  When you enroll in Part A of Medicare, you will be allowed to opt out of Medicare Part B.  It makes sense that if you have group health insurance through your employer, you might be tempted not to keep Medicare B.

However, that creates a dilemma.  When you eventually retire, or lose your group health insurance, you do not get the full 7 months to enroll in Medicare B. You can claim a “Special Enrollment Period” in which to enroll in Medicare B for only 63 days from the time your group health insurance cancels.

If you do not enroll in Medicare B during that “Special Enrollment Period” you will have to wait until the first quarter of the following year to join Medicare B.  Even if you do that, your Medicare B benefits will not begin until the following July 1.

In addition to not having health insurance during that time, Medicare charges you a penalty for every month that you could have had Medicare B but did not.


One of the ladies that called me was terminated in the last week of April.  Fortunately, she acted promptly.  We were able to get her enrolled in Medicare B, a Medigap to pay for health care that Medicare does not and a stand alone Medicare D plan to help her with her prescriptions.

She did not like my style.  She wanted to find another job with health insurance benefits.  She found me pushy until I explained to her that she only had 63 days in which to do everything.  After 63 days her application for Medigap would no longer be guaranteed issue.  She would be subject to medical underwriting.  With her heart and nervous issues, she would not be able to get a Medigap plan.


The second person who called me had procrastinated too long.  She wanted to wait to do something until after she got information from her employer about her COBRA rates.  By the time she received her COBRA information, her Special Enrollment Period had expired.  Her only option to get Medicare B is to enroll during the first quarter of 2013 and wait for her coverage to start on July 1, 2013.  Until then, her only option is to keep paying the high cost of COBRA.

The only thing that I was able to do for her was to advise her that because of her “pre-existing” conditions, (she was hospitalized for a full month earlier this year), she could not afford to put off applying for Medigap as soon as she was able to get Medicare B.   Again, if she waited 63 days from the date her Medicare B starts, she is subject to medical underwriting for her Medigap.  If she applies during the 63 days immediately after getting Medicare B, she has a Special Enrollment Period during which the insurance company is required to approve her policy, regardless of any pre-existing condition.


The lesson to be learned from these stories is that it is important for anyone who is planning to retire to learn Medicare’s rules.  They are close enough to what you are used to feel familiar.  However, they are different enough to trap you in some very expensive traps, if you are not careful.