Should You Enroll in Medicare Before 2022 Wraps Up?

(Maurie Backman)

Making sure you have health coverage in place is one of the most important financial moves you can make, whether you’re new to the workforce or preparing to leave it. In fact, if you’re already 65 or close to that age, you may be wondering if now is the right time to enroll in Medicare. You might even be thinking about doing it before the end of the year.

But does it pay to sign up for Medicare now? Ask yourself these three questions to find out.

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1. Do I still work?

If you are still working, you may be covered by a group health plan through your employer. And if that’s the case, you should know that you’ll have more time to sign up for Medicare, even if you’re nearing the end of your initial enrollment window.

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Your initial Medicare enrollment window spans seven months. It starts three months before the month you turn 65 and ends three months after that month.

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If you don’t enroll during that initial window, you could face lifetime surcharges on your Medicare Part B premiums for enrolling late. But that penalty won’t apply if you’re late to enroll because you were covered by a qualified employment plan at the time.

Of course, you should run the numbers to see if your health care costs are likely to be more affordable under Medicare than your employer’s plan. If your employer’s plan is heavily subsidized, it may be the best option, so you may want to keep it while you’re still working and not get Medicare for now.

2. Do I plan to quit my job soon?

Leaving a job can be a jarring experience, and the months that follow can be quite an adjustment. If you’re planning to leave your job in the new year, you might want to sign up for Medicare before 2022 ends. That way, you can adjust to your new coverage and have one less condition to deal with later.

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3. Do I want to continue funding a health savings account?

Once you enroll in Medicare, you are no longer eligible to contribute money to a Health Savings Account (HSA). That doesn’t mean you can’t use money in an existing HSA once you’re enrolled in Medicare. It simply means you can’t keep adding funds.

If one of your goals is to build up your HSA balance before you retire and you’re still working and in a group health plan, you may want to stop enrolling in Medicare. This includes Part A, which is generally free for enrollees.

Some seniors choose to get Part A coverage even if they are enrolled in a group health plan because it costs nothing and can serve as secondary insurance. But if you want to keep putting money into your HSA, you still can’t sign up for Medicare Part A.

At this point, you may have a number of year-end financial moves you want to make. These may include increasing your IRA and reviewing your investments. While you’re at it, take the time to make choices about Medicare. You may decide that signing up before 2022 ends is a smart idea. Or, you may decide to defer your enrollment and reconsider the question in 2023.

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