August 2011 - OutreachNC Magazine

16 OutreachNC • August 2011
Almost weekly, I deal with a client who is retiring
and has questions about when to take out
Medicare Part B. Most people get Part A automatically
at age 65, or before age 65 after a 24-month waiting
period on disability. When to take Part B is particularly
confusing if you are on or coming off a Group,
Retirement or Cobra Insurance from an employer. Let’s
briefly consider each one.
Group Insurance: Typically, you would take out
Part B coming off group insurance at age 65, if you
retire then. These days, many people are working
beyond age 65 to get full Social Security Benefits or
to keep a spouse covered until they reach age 65.
This was the case with my own parents. At age 65,
my dad was still working. He had a group insurance
plan with his employer, and my mother was covered
under his plan. At age 65, my mom and dad opted
out of Part B. At age 66, when dad retired and lost
his group coverage, he applied for his Part B as did
mom at age 69. There were no penalties for them
since they had creditable coverage with dad’s group
insurance and applied within eight months of losing
this coverage. (I would suggest applying three months
before losing this coverage.) They also purchased a
Medicare Supplement and Part D prescription drug
coverage at this time.
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When to take out Medicare Part B
Retirement Insurance: Some
people get insurance from their
employer after they retire, and it could
continue beyond age 65. It also often
covers the spouse of the retiree. In this
case, both would take out Part B at
age 65. Original Medicare (Parts A
and B) would become the primary Medicare Update
insurance with the retirement Terri Powell Herlica
insurance being secondary
coverage, assuming both are 65. At this time, you may
also want to compare the cost and benefits of: 1) Original
Medicare, a Medicare Supplement and Part D prescription
drug coverage or 2) Medicare Advantage Plan as opposed
to Original Medicare and Retirement Insurance.
Cobra Insurance: Under federal COBRA law,
companies with at least 20 employees enrolled in a
group plan must allow former workers to buy into the
group health plan for up to 18 months. This is typically
for people under age 65 since COBRA would become
secondary insurance to Medicare after age 65. With this
plan, the former employee pays the entire premium
themselves. In this scenario, at age 65, you should take
out Part B to avoid possible late penalties associated
with delaying enrollment. Every situation is different,
but I have not had a client where it was beneficial for
them to stay with COBRA at age 65 and beyond. Instead,
they utilized Original Medicare (Parts A and B) with one
of the other Medicare choices mentioned above. COBRA
may be able to protect a spouse for up to 36 months in
certain circumstances.
Of course, this is just touching the surface of these
issues, but I hope it offers some direction in making your
choices and planning.
Herlica of the Professional Service Group, LLC is a Retirement
Healthcare Specialist and can be reached at (336) 987-2372 or
terri.herlica1@gmail.com.
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