Old Woman Power Walking

One of the biggest choices you have to make when it comes to your Social Security retirement benefit is when to start collecting. You can choose to receive it as early as age 62 and as late as age 70, the longer you wait within that time frame, the larger your eventual per-month benefit will be. There are many factors that go into your choice, and depending on your circumstances, it could make sense to wait until closer to age 70 to get started.

If you choose to delay Social Security benefits, one thing you should still do a few months before you hit 65 is apply for Medicare Part A as early as three months before your 65th birthday. If you qualify, Medicare Part A costs you nothing and serves as the "hospital insurance" portion of your health insurance. If you don't have health insurance through work, you should sign up for the other parts of Medicare, too. They do have premiums attached, though, so if your job or your spouse's job adequately covers you, it's OK to wait.

Will you lose your other insurance?
One type of plan gets affected by your Medicare Part A enrollment: If you have a health savings account with a high-deductible plan through your current employer, then once you accept Medicare Part A, you and your employer can no longer make contributions to your account. Beyond that, your insurance through work and Medicare will typically coordinate payments via a set of rules described in a booklet available at Medicare.gov.

If your employer-sponsored health plan is adequate, you can sign up for Medicare Part A and delay signing up for the rest of Medicare. That has two key advantages:

  • You don't pay premiums on the rest of Medicare until you sign up for it. So long as you're covered through work, there are no penalties for delaying your Medicare Part B enrollment.
  • The act of signing up for Medicare Part B starts your one-time open-enrollment period for Medigap plans. Once you sign up for Medicare Part B, you have six months to sign up for a Medigap plan and avoid higher expenses or a refusal to insure you due to pre-existing conditions. Waiting to enroll for Medicare Part B makes your open-enrollment period start later as well, giving you the opportunity to take that underwriting-free sign-up period after you're done with work-related health insurance.

Note, though, that if you do not have coverage through work, you should sign up for the rest of Medicare as your 65th birthday approaches. You have an open-enrollment window from three months before your 65th birthday until three months after your 65th birthday. If you miss that window, you risk penalties, higher costs, and the potential that your Medigap insurance will not cover pre-existing conditions.

Isn't Medicare automatic?
If you're already receiving Social Security benefits at the time you become eligible for Medicare, you will be automatically signed up for Medicare Part A and Part B. You'll still need to choose whether to sign up for a Medicare Advantage or Medicare supplement plan. If, on the other hand, you're choosing to delay your Social Security past your 65th birthday, you need to actively enroll in Medicare order to receive it.

Unless you're covered by health insurance through work, signing up for Medicare at age 65 is the only way for you to preserve the full suite of benefits available through that program, at the lowest cost. If you're delaying your Social Security, the application at this link will let you apply for your Medicare benefits. Within three months of your 65th birthday, you can make your Medicare application the gift you give yourself that will last you the rest of your life.

Chuck Saletta is a Motley Fool contributor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.