01:00 AM EST on Sunday, December 18, 2005

This is the first installment in a two-part MoneyLine series about enrolling in Medicare Part B. The second installment appears tomorrow.

When retirement nears, you have to make a decision -- whether or not to enroll in Medicare Part B.

That's right -- Part B.

You've probably read a lot lately about enrolling in Medicare's new prescription drug feature, known as Medicare Part D.

But what about Medicare Part B, which generally covers doctor's visits and other such expenses? It's important to know about that, too, because if you don't sign up when you're eligible, you could face a penalty later on.

And Medicare Part B has a lot of tricky rules. So it's helpful to know the basics:

What Is It? Medicare is the federal health insurance program that generally covers people 65 and older and the disabled.

There are about 41 million Medicare beneficiaries nationwide. That includes more than 173,000 in Rhode Island, 960,000 in Massachusetts and 517,000 in Connecticut.

There are two main pieces to Medicare: Part A, which is hospital insurance, and Part B, which is medical insurance.

Medicare Part A: This helps to cover costs associated with hospitalization -- in other words, inpatient hospital expenses. It also helps to cover your expenses for skilled nursing facility, hospice and some home health care.

About 99 percent of Medicare beneficiaries don't have to pay a premium for Part A. That's mainly because they've worked in jobs covered by Medicare, paid Medicare tax and paid the tax for a long enough time.

For others, the premium will be $393 a month next year, up from $375 a month this year. (Certain other beneficiaries will pay a premium of $216 a month next year, up from $206 a month this year.) There are other costs involved, including deductibles.

Medicare Part B: This helps to cover the cost of visits to the doctor's office, lab tests, minor procedures, hospital outpatient services and doctor-administered drugs.

Beneficiaries will generally pay an $88.50 monthly premium for Medicare Part B next year, up from $78.20 a month this year. There are other costs involved, including deductibles.

Eligibility: In general, you become eligible for Medicare -- and your Medicare coverage starts -- when you turn 65.

That's true even though the age at which you become eligible for full Social Security benefits -- "full retirement age" -- is no longer age 65; it's later.

For example, for retirees born in 1940, full retirement age is 65 and 6 months. For those born in 1941, it's 65 and 8 months. (Full retirement age will gradually increase to age 67 for those born in 1960 and later.)

Automatic Enrollment: Here's another twist: Although Medicare is run by the federal Centers for Medicare & Medicaid Services, you sign up for Medicare through the Social Security Administration. (Medicare premiums are deducted from your Social Security benefits.)

It's possible that you'll be enrolled in Medicare automatically. If you start collecting Social Security benefits early -- at age 62, for example -- or if you've applied for Social Security benefits, the Social Security Administration will send you a Medicare enrollment package three months in advance of your 65th birthday, said Kurt Czarnowski, Social Security's regional communications director.

That package includes your Medicare card. In other words, there's an assumption that you'll be taking part in both Medicare Part A and Part B when you turn 65, so you'll automatically be enrolled in both. (If you don't want Part B, you must let the government know that you choose to "opt out.")

Other Enrollment Options: If you aren't collecting Social Security benefits when you turn 65, you won't automatically receive a Medicare enrollment package in the mail, and you won't be automatically enrolled.

Instead, you must contact the Social Security Administration to sign up for Medicare. Do this by visiting your local Social Security office. To find the address of an office near you, call Social Security toll-free at (800) 772-1213, or use its Web site:

www.socialsecurity.gov

Technically, you may enroll in Medicare at any point during a seven-month window that the experts call your "initial enrollment period." This period includes the three months before the month in which you turn 65, the month you turn 65 and the three months that follow.

But timing is important. If you put off enrolling, you may forget -- and you may be subject to a Medicare Part B penalty later on.

And although you technically may enroll in Medicare at any point within that seven-month window, the sooner you sign up, the sooner your coverage will kick in.

For instance, if you sign up within the first three months of that seven-month window, your coverage will start in the month you turn 65.

But if you sign up later during that seven-month window, your Medicare coverage will be delayed -- by as much as three months.

So your best bet is to sign up for Medicare as early as possible -- three months before you turn 65 -- by contacting the Social Security Administration, said Michelle Kitchman Strollo, a senior policy adviser with the Henry J. Kaiser Family Foundation, a nonprofit group that provides information and analysis on health care issues.

That way, your Medicare coverage will take effect the first day of the month in which you turn 65, she said.

Coming Tomorrow: MoneyLine looks at whether you should sign up for Medicare Part B if you're still working beyond age 65 and have an employer-sponsored group health plan, or if you're retired and have employer-sponsored retiree health insurance. There's also a list of resources you may use for additional information.

Neil Downing is a Journal staff writer and author of The New IRAs and How to Make Them Work for You. Questions about your money matters? Call us at 1-401-277-7484 and leave a message, or e-mail:

moneyline@projo.com

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