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Facing Medicare Decisions Head On to Optimize Choices & Minimize Costs

This information is particularly critical if you are age 64 or if you have turned 65 and you haven’t taken the necessary steps to enroll in Medicare.

By James Lange, CPA

Signing up for Medicare seems like it should be easy. But, if you don’t know the rules and pay attention to the details you could be jeopardizing your health! Not following the rules can lead to penalties like extra costs and possibly fewer choices. Some mistakes are irreversible and will penalize you for the rest of your life. Pleading ignorance of the rules will not grant you a redo.

James Lange, a CPA, attorney and Registered Investment Advisor, is a nationally-recognized IRA, Roth IRA, 401(k), and retirement plan distribution expert. Lange is the author of Beating the New Death Tax. For more information, visit

James Lange, CPA

Being an informed and proactive consumer is the only way to understand your Medicare financial and insurance options and enroll at the correct time to avoid any penalties.

My colleague, Diane Markel, CPA, and I have compiled some of our thoughts and observations, and we are also including some direct excerpts (with permission) from a article written by Elaine Floyd, CFP. Elaine is an intelligent and meticulous researcher. When she turned 65 and confronted the Medicare enrollment process, she was amazed by the complexity and assigned herself the task of educating financial professionals.

Let’s start with this reminder: if you sign up during your initial period or, if you are eligible, during a special enrollment period, you cannot be denied coverage. Period. No health problems can prevent you from enrolling. A “special enrollment period” is available for individuals who turn age 65 but are still covered by a group plan (20 or more employees). People in this category can sign up later. But you will need to sign up before your group coverage ends to avoid a lapse in coverage and potential penalties. These initial sign-up windows allow you to choose among all Medicare options.

Here is some advice direct from the

· Whether you are retired or still working, Medicare will likely become part of your life after you turn 65. In the United States today, most health plans pay secondary to Medicare. So, if you are currently covered by a retiree health plan, an individual policy, or a small employer group plan (an employer group plan that covers fewer than 20 employees), you must enroll in Medicare when you turn 65.

· If you don’t, your insurance claims may not be paid. And if you do not enroll in Medicare on time, you will be subject to late-enrollment penalties for the rest of your life. Generally, the only people who are exempt from enrolling in Medicare at 65 are workers and spouses who are covered by an employer group plan that covers 20 or more employees and their time will come later.

· When you turn 65, Medicare becomes the primary payer. Under Medicare, any private insurance you may have is secondary and will not pay until Medicare has paid its share, except if you have employer group coverage that covers 20 or more employees. To fully understand and implement your options, at around age 64 it is recommended that you determine if you will be able to maintain your current insurance coverage after you turn 65 and if yes, how does that coverage work with Medicare. If you are still working, or if you are retired and covered by a retiree plan, your employer or benefits administrator may be able to answer these questions.

· The initial enrollment period starts three months before you turn 65 and extends for 7 months. Medicare is automatic only if you are receiving Social Security when you turn 65; therefore, you would need to be proactive and sign up for Medicare Part A and B three months before your 65th birthday, so that Medicare coverage can start on the first day of the month you turn 65. If you want Part D, the prescription drug plan, you would then enroll through a private insurer or through Medicare.

· If you enroll in “Original Medicare,” you will also purchase supplemental insurance, known as “Medigap” to cover out-of-pocket expenses that Medicare does not cover. If you enroll in “Medicare Advantage Plans,” also known as Part C, these plans are offered by private insurers. They contract with Medicare and receive a per capita reimbursement from Medicare.

· Since it is projected that health care costs for today’s retirees (excluding long-term care) can easily exceed $250,000, it is important to make informed and sometimes irreversible Medicare decisions by age 65, while monitoring changes and options in the future.

We cannot stress enough the importance of beginning to explore the enrollment process at age 64. It can also be helpful to seek professional guidance.

We strongly encourage you to read Elaine’s full article at

About the Author: James Lange

James Lange, a CPA, Attorney and Registered Investment Advisor, is a nationally recognized IRA, 401(k), and retirement plan distribution expert. Lange is the author of several best-selling books that help IRA and retirement plan owners to get the most from their retirement plans using Roth IRA conversions and tax-smart planning as an integral part of the planning strategy. For more information, visit

For more on Medicare:

Can You Believe Those Medicare Advantage Commercials?

How to Avoid 5 Common (and Costly) Medicare Mistakes

How to Coordinate Year-end Tax Planning and Health Insurance Premiums

The Best Time to Switch From a Medicare Advantage Plan to a Medigap Plan

What are the Social Security and Medicare Predictions for 2021?