Medicare Part B coverage is optional. If you are not already receiving early retirement Social Security income when you turn 65, you need to contact Social Security to apply for Part A and Part B coverage. The assumption is that you will want this coverage unless you choose otherwise. You can elect Part B coverage during the 3 months prior to your 65th birthday, the month of your birthday, or the 3 months following your birthday. You pay a monthly premium ($96.40 for 2009) that is usually deducted from your Social Security check or billed quarterly if you are not yet receiving Social Security.

If you were NOT covered by group health insurance at age 65 and choose not to enroll in Part B, you can only later apply for coverage between January 1st and March 31st of each year with a delay in the start of coverage until that July 1st.

If you later apply for Part B, you may have to wait up to 15 months for coverage depending on when you apply. The cost of Part B may go up 10% for each 12-month period you could have had Part B and did not take it, and you will have to pay this extra amount for as long as you have Part B.

If you are covered by group health insurance at age 65 and choose not to enroll in Part B until your employment or group coverage ends, you can enroll in Part B any time while you are covered or within the 8 months following the month your coverage (COBRA doesn't count) or employment ends, whichever occurs first.

You choose not to take Part B coverage because you are covered by employer group coverage. The group plan assumes you have both Part A and Part B coverage. In this case the group plan would pay the Part B deductible and the 20% co-payments, leaving you responsible for the other 80% normally covered by Medicare Part B. (Groups under 20 employees where Medicare is primary.)

You choose not to take Part B coverage because you are covered by employer group coverage. The group plan pays whether or not you have both Part A and Part B coverage. Your employer later changes insurance plans and the new plan assumes you have both Part A and Part B coverage. In this case you may again be responsible for the 80% normally covered by Medicare Part B, unless you apply for Part B coverage right away. (Small groups changing insurance companies where the first company covers and the second one doesn't or a group that drops below 20 employees.)

Always check your health insurance contract or call your insurance company or health plan to determine how Medicare coverage is treated.

TRAP #3

You would now have to wait for the next January 1st through March 31st General Enrollment period to apply for Part B and then wait for coverage to start until July 1st without being able to purchase supplemental coverage until then. You may also be subject to the 10% extra charge for each 12-month period commencing 8 months after retirement.