Medicare Checklist: Avoid Costly Enrollment Mistakes
When you sign up for each part of Medicare matters, as one man's recently publicized issue shows. This enrollment checklist flags important info you need to know.


For seniors who aren’t covered by a health plan at work, Medicare is nearly always the most affordable and comprehensive alternative.
But as good as Medicare is, the penalties for not signing up for it at the right time can be brutal, as a cautionary story in the Boston Globe revealed.
In the story, Alan Cregg signed up for Medicare Part A (which covers some but not all inpatient medical costs) when he turned 65 three years ago. This was the right thing to do, since for most people there are no monthly premiums for Part A.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
However, because he was covered by his wife’s employer’s health insurance plan, he didn’t sign up for Medicare Part B for outpatient care or Part D prescription drug coverage.
Delayed Medicare Enrollment Results in Costly Penalties
The trouble started when Cregg’s wife lost her job. Because she wasn’t 65 yet, she signed them both up for COBRA coverage through Cigna insurance.
Believing that being on COBRA was the same as having employer health insurance, Cregg once again didn’t sign up for Medicare Part B.
A year later, he needed knee surgery. Cigna initially said they would cover the costs. But after he had the procedure done, the insurer changed its mind, saying that he should have signed up for Medicare Part B and D instead of going on COBRA. Cregg ended up paying the entire $20,000 medical bill out of his own pocket.
Even after paying, Cregg continued to dispute Cigna’s turnaround, claiming that the insurer never explicitly told him he needed to sign up for Medicare. A year later, Cigna finally agreed to reimburse Cregg (in part because of the bad publicity generated by the Boston Globe article).
While this may sound like a happy ending, it really isn’t. Why? Because Cregg will probably still have to pay a surcharge on his Medicare premiums for the rest of his life.
The Price of Delaying Medicare Enrollment
When you’re eligible for Medicare but are no longer “actively covered” by your company’s health care plan, you have eight months to sign up for Medicare Part B from the day you lose that coverage.
Being on COBRA doesn’t count as “active coverage.” Neither does post-employment health care coverage you could receive through your retirement plan.
If you miss this eight-month special enrollment period, you might not be able to sign up again until the next Medicare general enrollment period, which lasts from Jan. 1 to March 31 every year.
And if you wait a year or more before signing up, you’ll have to pay a 10% late-enrollment premium penalty for each full year you don’t sign up. That penalty never goes away.
You’ll also get penalized if you don’t sign up for Medicare Part D prescription drug coverage right away.
Once your special enrollment period begins, you have two months to sign up for Medicare Part D. If you miss this deadline, you’ll pay a cumulative 1% penalty for each month you delay signing up.
For example, if you wait a full year before signing up, your penalty will be 12% more than the standard monthly Medicare Part D premium. Like the Medicare Part B penalty, this one is permanent, too.
That’s why it’s important to know when you should first sign up for Medicare and under which conditions you may or may not need to enroll based on your current employment situation.
Your Medicare Enrollment Checklist
1. Figure out if and when you need to sign up for Medicare.
If you turn 65 and are still covered by your employer’s health plan, you may not need to enroll in Medicare. Whether you do or not depends on several factors.
- If your company has more than 20 employees, you may not need to enroll in Medicare when you turn 65, because your group health plan probably meets Medicare’s “creditable coverage” standards. In this scenario, your employer can’t force you to drop their coverage and use Medicare instead.
- If your company has 20 or fewer employees, and its group health plan doesn’t meet Medicare’s standards of creditable coverage, you probably will need to sign up for Medicare Parts A, B and D by your special enrollment deadline to avoid paying late-enrollment penalties.
In either of the above scenarios, you’ll want to speak to your employer’s benefits administrator to get their advice on whether you need to sign up for Medicare (or not). Even if you don’t need to enroll, you may want to compare premiums, deductibles, copays and prescription drug costs of your current health insurance versus those for Medicare. That way, you can see if, from a cost perspective, one option makes more sense than the other.
One other factor to consider: If you currently contribute to a health savings account (HSA) at work, you can no longer contribute to it once you sign up for Medicare. However, you can still use all remaining money in your HSA to pay for qualified out-of-pocket health care expenses.
2. Sign up for Medicare Parts B and D immediately if you’re no longer covered by employer health insurance.
Don’t make the mistake Alan Cregg made. If you or your spouse loses your employer group health insurance for any reason and either one of you is age 65, enroll in Medicare within eight months if:
- You’re unable to find a new job with a company that offers creditable group health care coverage.
- You’re not eligible to join your new employer’s health plan (because you’re a part-time or contract employee).
If you’re eligible for COBRA coverage, you can still sign up for it even after you’ve enrolled in Medicare. In these situations, COBRA may pay only for expenses that Medicare doesn’t cover. And since COBRA premiums can be extremely expensive, it may not be worth it to double your coverage this way.
3. Don’t worry if you’ve signed up for Medicare and then get another job where you’re eligible for employer health insurance.
Once you’re enrolled in Medicare, you should never drop your coverage even if your new employer offers a creditable group health plan. Should you sign up for your company’s plan, your medical expenses may be paid by your employer’s plan, Medicare or a combination of both.
Help Is Available
The issues around Medicare enrollment are complex, especially if you’re still working and need to figure out whether you should enroll immediately or whether you can put it off until you retire.
If your employer doesn’t have the knowledge to help you figure out what to do, consider contacting a local representative of the State Health Insurance Assistance Program (SHIP). These consultants can work with you at no charge to help you understand and evaluate your available Medicare options. To find a SHIP counselor in your area, visit www.shiphelp.org.
This material has been provided for general informational purposes only. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a qualified Medicare consultant for specific Medicare-related assistance.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Joelle Spear, CFP® is a financial adviser and a partner at Canby Financial Advisors in Framingham, Mass. She has an MBA with a finance concentration from Bentley University. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.
-
Retire in Finland and Live the Nordic Dream
Here's how to retire in Finland as a US retiree. It's ideal for those who value natural beauty, low crime and good healthcare.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?
If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?
If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or Relocate
Homeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and Friends
What starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
What the HECM? Combine It With a QLAC and See What Happens
Combining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
-
721 UPREIT DSTs: Real Estate Investing Expert Explores the Hidden Risks
Potential investors need to understand the crucial distinction between a REIT's option to buy a Delaware statutory trust's property and its obligation.
-
I'm an Insurance Expert: Yes, You Need Life Insurance Even if the Kids Are Grown and the House Is Paid Off
Life insurance isn't about you. It's about providing for loved ones and covering expenses after you're gone. Here are five key reasons to have it.
-
My Professional Advice: When It Comes to Money, You Do You
This is how embracing the 'letting others be' and 'learning to surrender' mindsets can improve your relationship with money.
-
Direct Indexing Expert Explains How It Can Be a Smarter Way to Invest
Direct indexing provides a more efficient approach to investing that can boost after-tax returns, but is it right for you?