Delaying Enrollment Could Result In A Permanent Penalty
As described above, you can’t reject premium-free Medicare Part A without also giving up your Social Security benefits. But since your work history is allowing you access to Medicare Part A without any premiums, few people consider rejecting Part A coverage.
The other parts of Medicare, however, do involve premiums that you have to pay in order to keep the coverage in force. That includes Medicare Part B and Part D , as well as supplemental Medigap plans. Medicare Part C, otherwise known as Medicare Advantage, wraps all of the coverage into one plan and includes premiums for Part B as well as the Medicare Advantage plan itself.
So it’s understandable that some Medicare-eligible people, who are healthy and not using much in the way of medical services, might not want to enroll in Part D and/or Part B. Similarly, people who are eligible for Part A but with premiums might want to avoid enrolling in order to save money on premiums. But before deciding to postpone enrollment in any part of Medicare, it’s important to understand the penalties and the enrollment limitations that will apply if you decide to enroll in the future.
There are penalties associated with delaying your Medicare enrollment unless the reason you’re delaying is that you are still working and you’re covered by the employer’s health plan. If that’s the case, you’ll be eligible for a special enrollment period to sign up for Medicare when you eventually retire.
What Are The Drawbacks Of Getting Medicare While Still Working
While Medicare Part A is free, Medicare Part B which covers doctor visits and outpatient medical supplies requires you to pay a monthly premium . If you keep your existing insurance, you could end up paying premiums for two policies, which could get expensive.
Also, having two insurance policies can be confusing and possibly lead to billing complications. You and your doctor would have to keep track of which plan is primary and which is secondary.
Finally, if you have a high-deductible health plan through your employer, you may no longer be eligible to contribute to a health savings account once you enroll in Medicare.
What Should You Do Once You Get Medicare
Although you can rely on Original Medicare alone, 86% of Medicare enrollees also have some type of additional coverage.2 It can be from an employer, a privately-purchased plan or from a government-run program like Medicaid. Original Medicare pays for a great deal of healthcare, but still leaves you with potentially costly gaps in healthcare coverage. Supplementary plans can cover these gaps including deductibles and copayments at a fraction of the out-of-pocket rate.
MedicareGuide.coms plan selector is designed to intelligently bring you the best Medicare Supplement plans. These plans, also known as Medigap policies, fill the gaps in coverage that you would otherwise be charged by Original Medicare.
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If You Work At A Large Company
The general rule for workers at companies with at least 20 employees is that you can delay signing up for Medicare until you lose your group insurance . At that point, you’d be subject to various deadlines to sign up or else face late-enrollment penalties.
While everyone’s situation is different, there’s a good chance your current insurance through work is a more cost-effective option, said Danielle Roberts, co-founder of insurance firm Boomer Benefits in Fort Worth, Texas.
This may be due to lower premiums and other cost-sharing aspects such as copays or co-insurance, or lower costs for prescriptions under the group plan.
“We often find that their insurance is already quite good and it doesn’t make sense to leave it,” Roberts said.
We often find that their insurance is already quite good and it doesn’t make sense to leave it.Danielle Robertsco-founder of Boomer Benefits
Again, however, if Part A is free, you can sign up as long as it wouldn’t interfere with your plans to contribute to a health savings account.
There are, of course, instances where Medicare might be the better option.
“If you’re going to, say, therapy every week and it’s a $40 co-pay, it might be cheaper to go on Medicare and get a supplement with it,” Gavino said.
On the other hand, if you take a specialty drug that is covered by your group plan, it might be wise to continue with it if that drug would be more expensive under Medicare.
Enrollments Periods For Medicare Parts C And D
Once a person enrolls in original Medicare, they may add a Part D plan or switch to Part C during the IEP. A person may also do either during the Open Enrollment Period for Medicare Advantage and Medicare prescription drug coverage, which runs from each year.
The best time to enroll in Part D is during the IEP. If someone waits until open enrollment, they may have a penalty in the form of a higher Part D plan premium.
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Medicare Part B: Delay To Avoid Premiums
If youre 65 or older and you or your spouse still have employer health coverage, you will probably want to delay enrolling in Medicare Part B, which pays for doctor visits and many other outpatient services. Why? Because unlike Medicare Part A, everyone pays a premium for Part B, so its never a free add-on.
As with Part A, your particular circumstances can influence your decision, and there are pitfalls to avoid:
If the employer has 20 or more employees: If your or your spouse’s employer has 20 or more employees and a group health plan, you’re not required to sign up for Medicare at age 65. But the clock starts ticking once you stop working or lose your employer coverage , so don’t miss your window.
If the employer has fewer than 20 employees: If your or your spouse’s employer has fewer than 20 employees and the health coverage is not part of a multiemployer group plan, at age 65 you must enroll in Medicare Part B, which will be your primary insurance.
If you have an HSA and want to keep contributing: If you have an HSA and want to continue making contributions to it, you must delay signing up for Medicare Part B. Stop making contributions to your HSA at least six months before you sign up for Part B. And youll want to sign up for Medicare at least a month before you stop work or lose employer coverage.
Benefits From A Flexible Spending Account
Flexible spending accounts , or, cafeteria plans, offer employees a menu of services they pay on a pre-tax basis. Authorized under Section 125 of the Internal Revenue Code, cafeteria plans allow employees to set aside money throughout the year to use toward medical or dependent care expenses not covered by health insurance benefits, including co-payments and deductibles.
When you sign up for a flexible spending account, it is important to know that the money deducted from your pay throughout the year must be used or they will lose it. Therefore, deducting too little is better than too much. A cafeteria plan is not a savings account the funds do not build up year after year.
The federal government allows two types of spending accounts. One is for medical reimbursement and the other is for dependent care spending, whether its for child care or care for an elderly family member.
The IRS does not set limits on the amount of medical and dental expenses that can be reimbursed by a spending account, buy your plan may establish annual maximums. Be sure to check to find out what yours are.
When filing income taxes, you must complete the IRS Form 2441 if you participate in a dependent-care spending account. Dependent-care contributions are reported in Box 10 of the W-2 forms.
Plan wisely when determining your cafeteria plan. Ask your benefits administrator if you have any questions.
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Retiree Coverage Continuing Past Age 65 You’ll Still Need To Enroll In Medicare A And B
Some companies will not cut a retiree off completely at the age of 65, but instead continue to offer supplemental retiree benefits, which can be used in conjunction with Medicare . The supplemental retiree health benefits may include prescription drug coverage , doctor visits, and other outpatient health care. Medicare will be your primary coverage if you’re covered under a retiree health plan, with the plan offered by your former employer serving as secondary coverage.
Do I Need To Notify Anyone If Im Delaying Medicare
You don’t need to provide notice that you’d like to delay enrolling unless you’re receiving Social Security or Railroad Retirement Board benefits. If you are receiving either, you’ll be automatically enrolled in Medicare Parts A & B when you turn 65, and you’ll need to let Social Security know you wish to delay Part B. By law though, if you receive Social Security benefits you must also have Medicare Part A.
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How Does Medicare Work With My Job
Keep in mind that:
- Most people qualify to get Part A without paying a monthly premium. If you qualify, you can sign up for Part A coverage starting 3 months before you turn 65 and any time after you turn 65 Part A coverage starts up to 6 months back from when you sign up or apply to get benefits from Social Security .
- If you have a Health Savings Account, you and your employer should stop contributing to it 6 months before you sign up for Part A to avoid a tax penalty.
Signing Up For Medicare Part B At 65 If Youre Still Working
If youre still working at age 65 and youre not claiming Social Security benefits, the government will not automatically enroll you in Medicare Part B, which covers doctors visits, diagnostic tests, medical equipment, ambulance transportation, and mental health care.
If you work for a company with 20 or more employees and youre enrolled in your employers health insurance plan, you dont have to enroll in Part B. You also might not want to because it isnt free.
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What Are Cases When Medicare Automatically Starts
Medicare will automatically start when you turn 65 if youve received Social Security Benefits or Railroad Retirement Benefits for at least 4 months prior to your 65th birthday.
Youll automatically be enrolled in both Medicare Part A and Part B at 65 if you get benefit checks. According to the Social Security Administration, more than 30% of seniors claim Social Security benefits early.1 For those seniors, Medicare Part A and Part B will automatically start when they reach the age of 65.
When do You Get Your Medicare Card?
You can expect to receive your Medicare card in the mail three months before your birthday. Your Medicare card will come with a complete enrollment package that includes basic information about your coverage. Your card wont be usable until you turn 65, even though youll receive the card before that time.
What Are Your Costs?
Keep in mind that youll still have to pay the usual costs of Medicare, even though youre automatically enrolled. Once your Medicare is active, the cost of your Part B premium will be deducted from your Social Security or RRB benefits.
What If You Already Enrolled in Medicare?
What about Medicare Supplement ?
What If I Switch to Medicare Advantage?
And if you want to switch to Medicare Advantage , youll have a one-time Initial Enrollment Period for Medicare Advantage that begins 3 months before the month you turn 65 and lasts for 7 months.
What I Have Part A?
Who Is Eligible For Medicare
Generally, Medicare is available for people age 65 or older, younger people with disabilities and people with End Stage Renal Disease . Medicare has two parts, Part A and Part B . You are eligible for premium-free Part A if you are age 65 or older and you or your spouse worked and paid Medicare taxes for at least 10 years. You can get Part A at age 65 without having to pay premiums if:
- You are receiving retirement benefits from Social Security or the Railroad Retirement Board.
- You are eligible to receive Social Security or Railroad benefits but you have not yet filed for them.
- You or your spouse had Medicare-covered government employment.
To find out if you are eligible and your expected premium, go the Medicare.gov eligibility tool.
If you did not pay Medicare taxes while you worked, and you are age 65 or older and a citizen or permanent resident of the United States, you may be able to buy Part A. If you are under age 65, you can get Part A without having to pay premiums if:
- You have been entitled to Social Security or Railroad Retirement Board disability benefits for 24 months.
- You are a kidney dialysis or kidney transplant patient.
While most people do not have to pay a premium for Part A, everyone must pay for Part B if they want it. This monthly premium is deducted from your Social Security, Railroad Retirement, or Civil Service Retirement check. If you do not get any of these payments, Medicare sends you a bill for your Part B premium every 3 months.
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The Size Of Your Employer Is A Key Factor In Determining The Answer
You’re turning 65 but still working and covered by your employer’s health insurance plan. Should you enroll in Medicare? The answer to that question is not as simple as it may appear.
The size of your employer could determine in part whether you enroll in Medicare Part B, which covers outpatient services. If your employer has 20 or more employees, your employer’s insurance will be your primary coverage. As long as you’re still working, neither you nor your spouse — if your spouse is older than 65 and covered by your plan — need to enroll in Part B. When you leave your job, you and your spouse can enroll in Part B during a special enrollment period, which lasts for eight months after you stop working.
You can always drop your employer coverage while you’re still working and enroll in Part B. You should compare benefits and costs of your employer coverage and Medicare. If you’re considering traditional Medicare, consider costs for Part B, a Part D prescription-drug plan and a Medigap supplemental insurance plan.
If your employer has fewer than 20 employees, you should enroll in Medicare as soon as you are eligible because it becomes the primary payer. As secondary payer, your employer’s plan will not pay for any expenses covered by Medicare. If your spouse is on your employer plan, she or he can continue on your employer plan until age 65 as long as you keep the plan for yourself as secondary coverage. Here are other questions to consider.
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Can You Take Employer Coverage Again When On Medicare
If you return to work for an employer who offers health insurance, you can take it. You are allowed to have both Medicare and employer coverage, and you can use them together. One will act as primary coverage and one will act as secondary.
The only thing to keep in mind is that when you have Medicare and an employer plan, you cannot contribute to a health savings account if its offered.
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Your Medicare Special Enrollment Period
If your employer has at least 20 employees and youre still working and covered under that plan when you turn 65, you can delay your enrollment in Medicare . In that case, youll get an eight-month special enrollment period to sign up for Medicare if and when you leave your job or your employer stops offering coverage. It will start the month after you separate from your employer, or the month after your group health coverage ends whichever happens sooner.
Sign up during those eight months, and you wont have to worry about premium surcharges for being late. And the eight-month special enrollment period is also available if youre delaying Part B enrollment because youre covered under your spouses employer-sponsored plan, assuming their employer has at least 20 employees.
But note that in either case, it has to be a current employer. If youre covered under COBRA or a retiree plan, you wont avoid the Part B late enrollment penalty when you eventually enroll, and you wont have access to a special enrollment period to sign up for Part B youll have to wait for the general enrollment period instead.
Medicare Part A: If Its Free Why Not Take It
If by the time you reach 65 youve worked a total of approximately 10 years over your career, youre entitled to premium-free Medicare Part A, which pays for in-patient hospital charges and more.
Why sign up for more hospital insurance when an employer plan already provides good coverage at low cost to you? Because in some cases, Medicare Part A may cover what your employer plan does not.
But as with so many aspects of Medicare, there are caveats, exceptions and potential pitfalls.
If the employer has 20 or more employees: If your or your spouse’s employer has 20 or more employees and a group health plan, you don’t have to sign up for Medicare at 65 if it doesn’t make financial sense.
If the employer has fewer than 20 employees: If your or your spouse’s employer has fewer than 20 employees and the health coverage is not part of a multiemployer group plan, at age 65 you must enroll in Medicare Part A, which will be your primary insurance. Primary means that Medicare pays first, and then the employer insurance kicks in to pay whatever might be covered under that policy but was not covered by Part A.
If you have an HSA and want to keep contributing: If you’re saving to a Health Savings Account and wish to keep doing so, you must delay enrollment in Medicare Part A , because Medicare enrollees can’t contribute to an HSA. In fact, to avoid a tax penalty, you should plan to stop making HSA contributions at least six months prior to signing up for Medicare.
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