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SMART MONEY, A COLUMN BY BRUCE WILLIAMS

Don't assume Medicare signup is automatic

Tuesday, November 27, 2012 - 12:01 am

I am writing because I know you have a wide audience and will be able to reach a lot of people who may find themselves in the same situation that we did. My husband retired early in 2006. Since then, he has done a good deal of consulting work for his former employer. We have maintained the health coverage with that employer at our own expense.

He did not start collecting Social Security until this month. Starting last year, we were inundated with offers from every insurance company in America, trying to get us to sign up for their Medicare supplements. We contacted his employer and asked exactly what needed to be done regarding Medicare since he would be turning 65 in August. The woman we talked to said that since we were already enrolled in the health plan with the company, we need do NOTHING; it would all be automatic. So we did nothing.

In September, when his doctor tried to get preapproval for a treatment, we were told my husband was uninsured! We questioned how that could be, because we had been told it was automatic. They said that only Part A hospitalization is automatic.

We immediately went to the Social Security office and signed him up for Parts A and B, but because it was now September, and five days after his birthday on Aug. 30, a penalty was imposed. Coverage for Part B would not begin until November, and no claims would be entertained for the period between Aug. 1 and Oct. 31!

I think there are probably a lot of people who are unaware of this punitive policy by the Medicare folks. We had assumed, wrongly, that since you can choose when to opt into Social Security and payments are adjusted accordingly, the same would be true of Medicare. We get a letter from Social Security every year telling what the benefits are and the options. We are surprised they do not do the same for Medicare, especially since a penalty is involved.

I hope you will spread the word so others don't get caught like we did. – D.T., Prescott, Ariz.

A.: The points you make here are pertinent. You have to make decisions in terms of Medicare to be perfectly covered. It has been well established that you are required to pay for some extra coverage. As you point out, you should get nervous when you're told that something is automatic and you need do nothing.

You have now alerted a great many people to the problem, and hopefully they will learn from you as I have.

Send questions to bruce@brucewilliams.com or to Smart Money, PO Box 7150, Hudson, FL 34674. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.