Medicare is national health insurance coverage for seniors and some other groups of qualifying individuals. The qualifying age is 65, and you pay for your Part A Medicare coverage with years of work and payment of Federal Insurance Contributions Act taxes. Part A has no additional monthly charge, providing hospitalization insurance at an age when you are likely to need it. If you are not receiving Social Security benefits at age 65, Social Security recommends that you enroll in Medicare because the benefits are yours if you are eligible. Enrollment is not mandatory but is automatic when you receive Social Security or Railroad Retirement.
You or your spouse must have 10 years or 40 credits of work history paying into the Medicare system to qualify for benefits at age 65. Once you have sufficient credits and reach the age of 65, you are eligible for Part A coverage. You can receive a free wellness examination within the first 12 months of signing up for Medicare. If you receive Social Security or Railroad Retirement Benefits before you are age 65, you are registered for Medicare Part A and Part B when you meet the age requirement. If you do not want Part B, follow the instructions you receive to notify Medicare in writing.
Part B is the outpatient care medical insurance that pays a part of your doctor visits and testing. Part A pays inpatient expense only, and many surgeries and procedures do not require inpatient hospitalization. Part B cost in 2011 is $115.40 monthly for new enrollees whose income is under $85,000 for individual taxpayers or $170,000 for married couples filing jointly. You have seven months to register for Part A and Part B, starting with the three months prior to your birthday, then your birthday month and three months after your birthday. If you do not enroll during this period of time, you will have to wait until open enrollment period the beginning of the following year. Coverage for those registered during open enrollment does not begin until July 1, so you may find that you have no insurance coverage for several months.
If you are entitled to Part A at age 65 and do not enroll at that time, you may incur a penalty for late enrollment. The penalty is 10 percent and lasts twice as long as the delay. For example, if you wait two years to enroll in Part A, you will pay a penalty over four years of coverage. Part B has a 10 percent penalty for each 12 months for enrollment delay, so Part B penalty is 20 percent for a two-year delay. Part B penalty does not go away but continues throughout your coverage.
If you choose not to accept Part B coverage in the seven months of open qualification and you are covered with comparable insurance at work, you have eight months after that employee coverage ends to obtain your Medicare Part B coverage without penalty. If your employment ends and you continue to receive insurance coverage through COBRA or your employer, you do not get an extension beyond the eight months. You must enroll in Part B within eight months of the end of active employment.
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