Sometimes the wrong word is chosen to describe something. I don’t know if it is because there is no better “word” available, or the describer wants to make a bigger “statement” by using a certain word. For example… Medicare says you will be PENALIZED, or there will be a PENALTY if you do not sign up for Medicare when you should. If you remember who “Uncle Charlie” is, Uncle Charlie loves this one because it’s “scary” and off course, no one wants to be penalized for anything. So Uncle Charlie really goes overboard with this one and of course, we all believe our Uncle Charlies.
In my opinion, the word Penalty is the wrong word to use. The Penalty comes into play when you do not sign up for Medicare Part B, or a Medicare Part D drug plan when you become eligible. If you put that off to sometime in the future (when you need it), you will not be able to just sign up when you want to and there will be a Penalty accessed in the form of higher premiums than you would have paid if you signed up on time. Here is the catch though – This is INSURANCE. Medicare is Health Insurance. It is not a Freebie, it is not a giveaway program, It’s Insurance. It’s something you pay for all your working life and something you continue to pay for after you get it. So, lets forget about the word Medicare and just think of it as insurance.
What are the reasons you would NOT sign up for Medicare at age 65?
- You are currently actively employed and covered under an employee group plan?
- Your spouse is actively employed and has you covered under their group plan?
- You are still working just to keep your spouse insured because they are much younger than you?
- You are covered under a retiree group plan that does not require you to enroll?
- Maybe you are the picture of health?
- Maybe you don’t go to the Doctor?
- Maybe you don’t take any medications?
- Maybe you believe you will never use Medicare, so why have it?
See, whether there is a Penalty accessed depends on the reason why you do not take Medicare at 65. If you have had alternate coverage prior to taking Medicare Part B no matter what your age is, there is NO penalty. But if you wait until you get sick or are facing large medical expenses that you did not plan for, well, you will pay more for your insurance. So, let me ask a few questions so you can look at this in perspective.
- Do you own a home?
- Have you owned that home for longer than 5 years?
- Do you have Home Owners Insurance on that home?
- How many claims have you had in the past 5 years?
If you answered that last question “Zero”, then Cancel Your Home Owners Insurance! You don’t need it! Why pay for it if you’ve never used it?
Of course, you wouldn’t do that. That would not be smart. But it’s the same concept. You don’t wait until the tree falls on your home before you go get home owners insurance. You also don’t wait until you get sick before you go get health insurance. It works the same way. If you did wait until the tree fell, wouldn’t you pay more for the insurance? – Yes, you would, if you could get it. Well, if you wait until you get sick to buy health insurance – you will also pay more for it.
This shouldn’t be called a Penalty. The government should just say “If you wait until you need Medicare before you enroll in Medicare, you will pay a higher premium”. Sounds simple enough, and if it was put to most folks that way, there would be a whole lot less worrying about Penalties. Take your Medicare benefits when you are supposed to so that when you need it, it’s there for you, and don’t worry about Penalties.