01:00 AM EST on Monday, December 19, 2005

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

When retirement nears, you have to make a decision -- whether or not to enroll in Medicare Part B, which generally covers doctor's visits and other such expenses. It's important to know about that, 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.

Still Working: If you continue working past 65 and have health insurance through an employer-sponsored group plan, where does Medicare fit in?

You can still sign up for Medicare Part A. There'll probably be no cost to you -- and there's a chance that Medicare Part A will cover an expense that isn't covered by your employer-sponsored plan.

"It isn't necessarily going to get you any benefit, but there's no harm [in enrolling] because there's no additional cost," said Kurt Czarnowski, regional communications director for the Social Security Administration.

"Besides, we want people to talk with us, because even if a person contacts us solely with the intent of getting Part A, we might be able to help them" in other areas -- perhaps by checking to see if they're eligible for more Social Security benefits, or by explaining the various rules, he said.

So that takes care of Medicare Part A in such circumstances. But what about Medicare Part B? That's where things can get tricky.

It may not make sense for you to sign up for Medicare Part B -- especially if you work for a large company that has a comprehensive health plan.

After all, "Why pay premiums for something you don't need," 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.

Besides, there's no need to duplicate the coverage you receive from your employer-sponsored plan, Strollo said in a telephone interview from the foundation's office in Washington, D.C. In that case, you should sign up for Medicare Part B later on, when you eventually retire. And you generally can do so at that time without penalty, Strollo said.

But contact Social Security in advance of your eventual retirement, to make plans. Why? If you wait too long to enroll, you may face a penalty.

That penalty is in the form of a higher premium for Medicare Part B -- and you'll have to pay that higher premium for the rest of your life. So delay can cost you money.

Here are the general rules for Medicare Part B if you keep working beyond 65. They apply if you're 65 or older and are covered under a group health plan -- either from your current employment or your spouse's current employment:

If there are 20 or more employees where you work, there's no need to sign up for Part B while you still have group health coverage. Later on, you may still enroll in Medicare Part B without penalty -- but you must do it within eight months of leaving your employer (or within eight months of losing your employer-sponsored health coverage).

Technically, this is known as your special enrollment period. It ends the eighth month following the last month you were covered by your employer-sponsored plan.

"If the employment relationship ends, you need to sign up for Medicare," Czarnowski said in an interview at Social Security Administration regional headquarters in Boston.

If there are fewer than 20 employees where you work, enroll in Medicare Part B so that it takes effect when you turn 65. That's because coverage under your employer's plan probably will kick in only after Medicare pays. (In other words, your employer's plan probably will serve only as a supplement to Medicare, as secondary coverage, so you should get Medicare.)

If you keep working but have no group health coverage, contact Social Security before you turn 65 to sign up for Medicare Part B so coverage can begin when you turn 65.

Retiree Health Insurance: If you're retired and have employer-provided retiree health insurance, contact Social Security before you turn 65 to sign up for Medicare (Part A and Part B) so that coverage can begin when you turn 65, said Deane Beebe, communications director of the Medicare Rights Center, an independent, nonprofit consumer group.

"Once you retire, even if you have [employer-sponsored retiree health coverage], you still need Part B," Beebe said in a telephone interview from her organization's headquarters in New York.

Otherwise, you'll have to pay a penalty when you sign up for Part B later on. Besides, employer-sponsored retiree health insurance is typically secondary coverage -- it typically kicks in only after Medicare pays its share, she said.

The Penalty: This is something you want to avoid, because it can really sting. If you don't enroll in Medicare Part B when you're eligible (as described above), you'll have to pay a penalty -- technically known as a "premium surcharge."

In general, it's 10 percent for each full 12-month period that you could have had Medicare Part B but didn't enroll.

For example, suppose you decide to sign up for Medicare Part B 24 months after you were eligible. In that case, you'll have to pay not only the standard $88.50-per-month premium, but also a surcharge of about $18, for a total of about $106. So it's a good idea to sign up for Medicare when you're eligible.

TODAY'S TIP: When you're nearing retirement, the Social Security Administration strongly recommends that you contact that agency in January of the year in which you'll retire, Czarnowski said.

That way, the agency can explain your options to you, well in advance, not only about Medicare, but also about Social Security retirement benefits, he said.

Also keep in mind that this two-part MoneyLine series offers only an overview of the rules. To see how the rules fit your particular circumstances, read "Enrolling in Medicare," a booklet that's published by the Centers for Medicare & Medicaid Services.

For your free copy -- printed either in English or in Spanish -- call Medicare toll-free at (800) 633-4227 (ask for Publication CMS 11036), or use this Web site:

www.medicare.gov

The Social Security Administration also has a booklet, "Social Security: Medicare" (SSA Pub. 05-10043). For your free copy, visit your local Social Security office, call the agency toll-free at (800) 772-1213, or use its Web site:

www.socialsecurity.gov

(While on the Web site's home page, get more information by clicking on the link labeled "Plan Your Retirement" toward the middle of the screen.)

While you're online, be sure to read "Talking About Medicare Health Coverage," a thorough, plain-language booklet published by the Kaiser Family Foundation:

www.kff.org

The Medicare Rights Group also has a bunch of free publications written in plain language and loaded with tips about Medicare:

www.medicarerights.org

(While at the site, you can sign up for free newsletters.)

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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