Making sure you have health coverage is one of the biggest financial moves you can make, whether you’re new to the world of work or preparing to leave it. In fact, if you’re 65 years old or close to that age, you may be wondering if it’s time to sign up for Medicare. You might even consider doing it before the end of the year.
But do you pay to sign up for Medicare now? Ask yourself these three questions to find out.
1. Am I still working?
If you are employed, you may be covered by a group health plan through your employer. And if that’s the case, you should know that you’ll have more time to enroll in Medicare, even after your initial enrollment window.
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The initial enrollment window for Medicare is seven months. It starts three months before the month in which you turn 65 and ends three months after that month.
If you don’t enroll during that first window, you may face a lifetime suspension of Medicare Part B premiums if you enroll late. But that penalty doesn’t apply if you’re late in enrolling because you were covered by an eligible employer’s plan at the time.
Of course, you should run the numbers to see if your health care costs might be cheaper under Medicare versus your employer’s plan. If your employer’s plan earns you a lot of money, it may be a better option — so you can keep it while you’re working and stay on Medicare for now.
2. Am I planning to leave my job soon?
Leaving a job can be a stressful experience, and the next month can be a big adjustment. If you plan to leave your job in the new year, you can sign up for Medicare before the end of 2022. That way, you can adjust to your new coverage and have less hassle. more to be discussed later.
3. Do I want to save money in a health savings account?
Once you enroll in Medicare, you can no longer contribute to a health savings account (HSA). This doesn’t mean you can’t use the money in an existing HSA once you’re enrolled in Medicare. It just means that you can’t always add money.
If one of your goals is to increase your HSA balance before you retire, and you’re still working and in a group health plan, you can suspend your Medicare enrollment. This includes Part A, which is generally free for enrollees.
Some seniors choose to get Part A coverage even when they enroll in a group health plan because it costs nothing and can act as a secondary insurance. But if you want to keep adding money to your HSA, you can’t sign up for Medicare Part A first.
By now, you probably have an annual financial activity that you want to do. This may include increasing your IRA and reinvesting. While you’re at it, take the time to make Medicare choices. You may decide that registering before the end of 2022 is a smart idea. Or, you may decide to postpone your registration and reconsider the question in 2023.
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