Medicare Moments: Can Enrolling in COBRA Cause a Penalty?

Hi, thank you for listening. This is Toni King, and welcome to this Medicare Moments podcast! You know, I took the Medicare and You handbook, and I put it in “people terms”, because people have a hard time trying to understand Medicare, the Medicare and You handbook. So I’m here to help you personalize your Medicare. One of the things that bothers people the most is, will I get a penalty? Today, we’re gonna talk about enrolling in COBRA. How it’s important to do it at the right time and the right way. So, let’s get started. As you know, I write an article in a newspaper in the Houston area, and here’s Robert out of Katy in regards to COBRA. Robert writes: “Dear Toni, I lost my job due to COVID layoffs in the oil industry, and my wife and I are now enrolling in Medicare Part B. My employer paid for eighteen months of COBRA and it’s almost over, and I’m finding there will be a penalty for not enrolling when we should have. I didn’t know when to enroll. I don’t know the rules on Medicare—when to enroll and how to enroll properly. I have never received a Medicare and You handbook, so I was unaware of the Medicare rule until I began reading your Toni Says Medicare column in our local newspaper. We are now seventy-years-old, and the Part B penalty for us is about fifty percent of the premium we’re already paying. It’s been five years since we turned sixty-five and enrolled in Medicare Part A. Can you please tell me what I need to do? I am just lost as a goose.” And this comes from Robert from Katy, Texas. So here’s my answer to Robert, and this can be anybody out there in Medicare land. So here’s Robert’s answer—just letting him know that there is an eight-month window. Medicare does not have an eighteen-month window, which is what Robert thought to enroll in Medicare Part B, so he needs a special enrollment period, is what it’s called. A special enrollment period. If you are no longer working full-time with true employer or company benefits, waiting longer than eight months to enroll—not nine months, not eighteen months—will cause a Medicare penalty. The Part B penalty, the famous, Medicare Part B penalty. So, if this is you and you’re having that issue out there, you need to listen to this podcast, because this is very confusing for all of America. The penalties can be extremely costly, and the penalty is not gonna last for just one month—but forever. So let’s talk about the Medicare Part B, as in boy—the Medicare Part B penalty. It’s important to be sure that your Medicare Part B begins the day of the month that you lose your employer or company benefits, or the day that your COBRA starts—not the day that your COBRA ends. In my Medicare Survival Guide: Advanced Edition, in chapter one, we discuss this. We go through all the different rules and getting your SEP—your special enrollment period. This is extremely important. Be sure that your Medicare Part B begins the day that you lose your employer or company benefits, or the day that your COBRA starts. In chapter one of the Medicare Survival Guide Advanced Edition that I wrote, I discussed enrolling in Medicare the right way. I discussed COBRA specifically. So many are enrolled in Medicare Part B with a big surprise—like you have, Robert. They find they are penalized, because they could have had Medicare part B, but they didn’t enroll. The penalty doesn’t just go all the way back to the day that you lose your company benefits. It goes all the way back to the day that your Medicare Part A started—or the day that you turn sixty-five. Could be years. And penalty—don’t faint anybody out there—here’s how the penalty goes: The penalty is ten percent for every year, or twelve-month period, that you could have had Medicare Part B, but you failed to enroll. I did a Medicare workshop in Wharton, for a hospital in Wharton, Texas. There was a gentleman who was seventy-nine-years-old, who had been on his wife’s company insurance. He had always had her insurance. He had not enrolled in Medicare Part B, but he had enrolled in Part A when he turned sixty-five. So you’re looking at fourteen years. When his wife—who was the working spouse, and he was on her insurance—when she lost her job, she didn’t even think about him getting into Medicare, having him enrolled in Part B. And she went on COBRA, and she lasted for the eighteen months. And when he was seventy-nine, he went down to the Social Security office to enroll in Medicare Part B, and he was shocked. Shocked to find out that this premium was not what it is this year—which is a hundred and seventy dollars and ten cents—but it was a hundred and seventy dollars and ten cents, plus three hundred and twenty-six dollars and twenty cents. Which ended up being almost five hundred dollars a month, because he had a hundred and forty percent penalty. Medicare’s penalty for not enrolling in Part B goes all the way back to the day—like I said—that you turned sixty-five. Well, he turned sixty-five fourteen years ago. So ten percent, times the fourteen years, is a hundred and forty percent forever. And people say, “Well, Toni, how can this be? I didn’t know this. Nobody told me.” You know what? When you have to enroll in Part B, you have to do it the right way. Call the Social Security Office. They don’t give you a second chance to go back and do it over again. You have to do it the right way. So, if you’re someone like the gentleman in Wharton. Or you’re someone like Robert who’s feeling the pain because he’s waited past the eighteen months and now he is going to get a penalty—ask somebody. Call the Social Security Office. Their number is 1-800-772-1213. And ask ’em a question. Don’t talk to your friends. That is one of the biggest mistakes that you can make when you are trying to get on Medicare—is talk to your friends. Email us. We will be glad to help you and give you the right answer. My email is info@ToniSays.com. This is one thing we tell everybody at the office. Have Part B in place when leaving your job or losing your employer or company benefits, because the penalty doesn’t just last for one day. It lasts the rest of your Medicare life. Do not wait past the eight-month window when you are leaving your true employer benefits to enroll in Medicare Part B. That’s very important. We help people with counseling consultations, to help people understand how to enroll in Medicare the right way. So let’s go over some questions that you may have about transitioning into Medicare. We got the one: Should I enroll in Medicare, even if I’m offered COBRA health Insurance and leaving my job? The answer is: Yes, don’t wait. Enroll in Medicare, because you’ve got that eight-month window, and you just don’t want to wait too long. So the answer is yes—yes, enroll in Medicare, although you might need COBRA to cover your spouse or a dependent child. Because the Social Security Administration—as far as COBRA is concerned—they now have new rules. Cover your spouse. Not sixty-five, can stay on COBRA, but you can come off of it. You can disenroll out of the COBRA Plan, not enroll in it, and get Medicare, and it can be your primary insurance. You can get a Medicare supplement, or you can choose a Medicare Advantage Plan—whichever one best fits your needs. But if you are offered COBRA and you’re past sixty-five, do what’s right for you. Question number two is: The Medicare enrollment process automatic. How does Medicare enroll you? If you are turning sixty-five and you’re already receiving your Social Security check, then poof—that’s the easiest way to enroll in Medicare. You’re gonna have your Medicare card. It’s going to automatically happen, because Social Security Administration enrolls everybody in Medicare. So when you’re turning sixty-five and you’re already receiving your Social Security check, Social Security knows that you’ve turned sixty-five. They send the information to Medicare, and Medicare issues you your Medicare card, and you get it in the mail. We have people that come in our office, and they bring a stack of mail they have not opened at all. And in that stack of mail, there’s an envelope, and it’s from Social Security, and there is their Medicare card. They had no idea that it was there, because they were receiving their Social Security check. They had no idea that they were enrolled in Medicare. So you can see, people are confused. What happens when you’re not receiving your Social Security check? That was me. I’m self-employed. I needed to enroll in Medicare. I was not receiving my Social Security check when I turned sixty-five. I had to go online and enroll in Medicare. So, if you are not receiving a Social Security check and you want to enroll in Medicare, you need to go online and enroll through the Social Security website. One thing that people need to know is that there’s three family members to Medicare. You have Medicare, the IRS, and Social Security. And three of them are the ones that we have to work with when we get all Medicare, and they pass all of our information among the three government programs. So that’s the three family members, as far as Medicare is concerned. So. what happens if someone is past sixty-five and they have to leave work? They’re leaving work, and they want to enroll. They haven’t enrolled in part B. Then you need to file the forms, which is what Robert should have done. He should have gotten a CMS L564—which is a request for employment information—taken it to his employer, had them sign it, and taken that form with the CMS 40B—which is your application for Part B—and taken both those forms to the Social Security Office that’s in his area. And they would have enrolled him in Medicare. So, you know, it’s confusing, but once you learn what you need to do, it’s not as confusing as you think. Question number three is: What if I become unemployed or retire, enroll in Medicare, and then want to go back to work? A lot of people go back to work. What do I need to do? That’s a very important question. What you’ve got to look at is, look at your new employer. You’re on Medicare at this moment. Maybe you have a Medicare supplement, maybe you’re on a Medicare Advantage Plan, but now, your employer is going to provide you with health insurance. What do you need to do? You can disenroll in Medicare Part B by contacting your Social Security Office. There is a form that they will want you to fill out. And you can send it back to the Social Security Office, and you can delay your Part B for a later date. And then when you go back and you want to get back on Medicare, you can re-enroll by using those forms I was talking about a few minutes ago. The CMS L564, which is the request for employment information. You get that new employer to sign it, because you’re past sixty five. And then you get the CMS 40B— and that is your application for Part B—and you submit those two forms to your local Social Security office. We tell everyone to go into the Social Security office face-to-face. Always see somebody. You can call them. You can have a telephone interview. But seeing people face-to-face just happens to answer the questions a little better. So, if you’ve got a question or you have a problem and you want some answers, email me at info@ToniSays.com. That’s info@ToniSays.com. I just want to thank you for listening to the Medicare Moments podcast and become part of our Medicare Moments family. And if you still have questions, like I said, we help you personalize your Medicare. We want to make it for you and your family so it is not difficult. If you need us, you can visit our website. The website is ToniSays.com. That’s ToniSays.com. I am Toni with an I and not a Y, because I am a girl. Thank you for listening to us, and have a great day. Until next time, we will see you later!