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When should you sign up for Medicare? Here's what an expert had to say

More Americans are retiring later in life, and you don't have to sign up for Medicare right when you turn 65, but there are key things to know to avoid penalties.

PORTLAND, Ore. — Heading into summer, it's the perfect time to talk about retirement and what comes next for your health insurance.

"A lot of people retire this time of year. Summer's coming up, the weather is getting a little bit warmer. People are wondering – what should we do in retirement?" said Michael Reeves, assistant director of Medicare sales at Regence.

There are some key timeframes to keep in mind when it comes to planning ahead and avoiding any unnecessary penalties.

"Most people think of it as 'I'm turning 65, I've got to get Medicare,' but if you're planning on working past 65, you don’t necessarily have to sign up for Medicare right away," Reeves said. 

Related: Expert tips to navigate Medicare

More Americans are retiring later, for a number of reasons. It could be a social security strategy, or a need for employer insurance for a family member, or maybe they just need to keep earning to save up.

"It's okay to let Medicare wait for you," Reeves said.

How do you know if waiting is the right option for you, and what should you do to avoid those pesky penalties?

First, start planning for health coverage well before your 65th birthday. About a year before that, when you turn 64, you should start planning ahead, no matter if you plan to retire at 65 or not, Reeves said. That way, you're prepared when it comes time to enroll or take action to avoid penalties.

"When you first turn 65, you have a seven-month window to enroll in Medicare. That includes the month of your birthday, three months before, and three months after," he said. "You enroll in any time in there, you won't have to worry about penalties."

However, you can bypass that entire timeline if you have what the government considers "credible coverage," which most commonly means coverage through an employer. But there are some additional steps to make sure those penalties are waived. Check with your employer, because you'll likely need them to fill out a form to ensure a Special Enrollment period to sign up without a penalty.

If you're self-insured, getting your insurance through an individual exchange or through the state, Reeves said you'll want to follow the regular seven-month timeframe.

Here are some other things to consider when figuring out your plan for Medicare and retirement:

  • Think about your providers – are they in the network?
  • Prescription drugs – that's a big monthly cost and plans can vary in price.
  • How do you plan to spend your retirement?

"Are you someone who is hoping to stay home and stay in your neighborhood? Or are you looking to travel? To get out? Whether it's traveling on the countryside, going on a cruise, going aboard – making sure you find a health plan that suites your needs," Reeves said.

Also, consider your health savings plan, or HSA. If you have one, you and your employer should stop contributing to it six months before you retire in order to avoid a tax penalty.

"I tell them wait: if you have a good HSA, let's keep contributing, work towards that and build it up nice and let it come with you in Medicare when the time is right for you," Reeves said.

At the end of the day, Reeves said it's all about being prepared and having a plan. That's where local agents and resources can really help.

"It may not always be the best idea to take advice from a neighbor, because their situation may not equal your situation," he said. "So, make sure you’re calling a local resource, calling the experts."

Visit medicare.gov for more information.

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