After I graduate, I will return to work at the state. There is a one-month gap after graduation before I can resume working for the state. I鈥檒l need coverage during that time. I鈥檇 like to study about oceans and volcanoes at a school with easy access to them.
Once I have enough longevity with the state to retire, I鈥檒l do that and obtain retiree medical benefits. I鈥檒l probably return to school, enrolling at the University of Hawaii, and possibly living on campus to keep costs down.
Studious State Worker
Related: I鈥檓 48 and want to retire next year. Do I have enough money to last me until I鈥檓 98?
Dear Studious,
First, let me say that these major life events sound very exciting. Taking the time after decades of work to study about oceans and volcanoes while you pursue a graduate degree 鈥 that is the stuff of dreams.
Health scares and a lack of insurance, however, are the stuff of nightmares, so I applaud you for being conscientious about your options before you step onto campus. This can be a complicated situation.
Once you leave your job, you鈥檒l have a special enrollment period (that lasts eight months) to sign up for Medicare Part B. If you don鈥檛 sign up in a timely manner, you鈥檒l have a penalty to pay. Part D鈥檚 special enrollment period is two months.
For those unaware, there is often a penalty for late enrollment of Part B and Part D 鈥 unless the individual has 鈥渃reditable coverage,鈥 such as through an employer.
Do you have questions about retirement, Social Security, where to live or how to afford it at all? We want to hear from you. Join the conversation in our Facebook community: Retire Better with MarketWatch.
Universities can offer creditable coverage, which would allow you to continue without any other parts of Medicare. This is not a blanket statement, though 鈥 some do, some don鈥檛. I would suggest you reach out to student affairs or a human-resources official to help you understand what is and is not offered to you with a student-health plan. Then you should compare it to what you鈥檇 get with Medicare.
Now, you might not want to hear this, but going with Medicare after leaving your job may be the easiest option. Some retiree insurance plans may still require you to have both Parts A and B, for instance. You also have that gap period when you go back to work where you鈥檒l need coverage.
Those are two arguments for considering Medicare. That, and we don鈥檛 know what the future holds. 鈥淭he future of his employee benefits is uncertain, and it would probably be a good idea to get established with a primary care physician/family practice to be sure of continuity,鈥 said John Power, a certified financial planner.
鈥淭he college may have some offering, but it may cost as much as the Medicare options,鈥 he added. 鈥淟ook at that for sure, but I鈥檇 consider a supplement to traditional Medicare as the best choice.鈥
You may also want to consider Medigap or Medicare Advantage. 鈥淩etiree coverage might not pay your medical costs during any period of time when you were eligible for Medicare but didn鈥檛 sign up for it,鈥 according to Medicare.gov.
Your wife should consider the same steps, if she won鈥檛 have any backup options when you leave your employer.
Still, if you enroll in Part B and then decide you don鈥檛 need or want it anymore, you will need to follow some clear steps. There are two ways to drop coverage, according to Medicare.gov: Contact the Social Security Administration or if you鈥檝e gotten a welcome packet recently, follow the instructions it lays out and send your card back. 鈥淚f you keep the card, you agree to keep Part B, and you鈥檒l start paying the monthly Part B premium,鈥 the site says.
Getting this in order may seem like a headache, but you鈥檙e on what sounds like a really exciting journey 鈥 good luck.
By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com