The Basics On Signing Up
Medicare enrollment in Part A and Part B is automatic if you have claimed Social Security benefits before your 65th birthday your Medicare card will arrive in the mail and coverage begins the first day of the month in which you turn 65. There is no premium charged for Part A in most cases, and you may be able to turn down Part B at that point without incurring late-enrollment penalties if you are still working and receive your primary insurance through work.
If you have not yet applied for Social Security, signing up for Medicare requires proactive steps to avoid problems.
Medicare offers an Initial Enrollment Period around your 65th birthday. If you miss that window, you will be subject to a late enrollment surcharge equal to 10 percent of the standard Part B premium for each 12 months of delay a penalty that continues forever. That can really add up. In 2017, 1.3 percent of Part B enrollees paid penalties , according to the Congressional Research Service. On average, their total premiums were 31 percent higher than what they would have been.
Medicares prescription drug program comes with a much less onerous late enrollment penalty, equal to 1 percent of the national base beneficiary premium for each month of delay. In 2019, the base monthly premium is $33.19, so a seven-month delay would tack $2.32 onto your plans premium.
Late enrollment also exposes you to significant gaps while waiting for Medicare coverage.
Can I Get Medicare While Working
Regardless of whether youre employed, it makes sense to enroll in Part A as soon as youre eligible. Since Part B is not premium-free like Part A is for most, you may wish to delay enrollment if you have group insurance.
As stated above, the size of your employer determines whether your coverage will be considered creditable once you retire and are ready to enroll. Group coverage for employers with 20 or more employees is deemed creditable when group coverage for employers with fewer than 20 employees is not.
Without creditable coverage during the time youve been Medicare-eligible, youll incur late enrollment penalties. When you leave your group health coverage, the insurance carrier will mail you a creditable coverage letter. Youll need to show this letter to Medicare to protect yourself from late penalties.
You Should Sign Up Right Away If:
- You get health insurance from an employer with fewer than 20 employees
- Youre enrolled in individual health insurance, like an Obamacare plan
- You rely on a Christian health ministry, short-term insurance, or have no insurance at all
- Youre using COBRA, retiree insurance, or health insurance from a previous job or
- You have VA health coverage.
If you choose to delay Medicare, youll want to consider the financial implications of doing so first since most Medicare beneficiaries are satisfied with their coverage and healthcare costs. If you didnt sign up for Medicare when first eligible, you may face possible late enrollment penalties.
Instead of delaying enrollment, you could opt-out of Medicare forever however, that means you would also have to forego Social Security benefit. If you really want to do this, you would have to speak with Social Security.
Can You Have Employer Coverage And Part D
When it comes to Part D, you can delay enrollment if your employer group insurance has prescription coverage. This is similar to Part B. Always compare your group insurance to what the cost of Medicare + Medigap + Part D would cost. Its cheaper to leave group insurance and enroll in a Medicare Supplement plan and Part D plan.
If The Employer Has 20 Or More Employees
As long as you have group health insurance from an employer for which you or your spouse actively works after you turn 65, you can delay enrolling in Medicare until the employment ends or the coverage stops , without incurring any late penalties if you enroll later. When the employer-tied coverage ends, youre entitled to a special enrollment period of up to eight months to sign up for Medicare.
Note that “active employment” is the key phrase here. You cant delay Medicare enrollment without penalty if your employer-sponsored coverage comes from retiree benefits or COBRA by definition, these do not count as active employment.
Nor does it count if you work beyond 65 but rely on retiree benefits from a former employer. You must be actively working for the employer that currently provides your health insurance in order to delay Medicare enrollment and qualify for a special enrollment period later on.
The law requires a large employer one with at least 20 employees to offer you the same benefits that it offers to younger employees . It is entirely your choice whether to:
- accept the employer health plan and delay Medicare enrollment
- have the employer coverage and Medicare at the same time
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Medicare Prescription Drug Coverage
Medicare Prescription Drug Plans are sold by private insurance companies approved by Medicare. All people new to Medicare have a seven-month window to enroll in a PDP three months before, the month of and three months after their Medicare becomes effective. The month you enroll affects the PDPs effective date. All people with Medicare are eligible to enroll in a PDP however, unless you are new to Medicare or are entitled to a Special Enrollment Period, you must enroll or change plans during the Open Enrollment Period for Medicare Advantage and Medicare Part D, Oct. 15 through Dec. 7. There is a monthly premium for these plans. If you have limited income and assets/resources, assistance is available to help pay premiums, deductibles and co-payments. You may be entitled to Extra Help through the Social Security Administration. To apply for this benefit contact SHIIP at 1-855-408-1212 or the Social Security Administration at 800-772-1213 or www.socialsecurity.gov.
Theres A Push For Change
If the rules governing the transition to Medicare sound complicated, rest assured that experts agree. Moving into Medicare from other kinds of health insurance can be so complicated that it should be a required chapter in Retirement 101, Mr. Moeller said.
The only government warning about the risks associated with late enrollment comes in the form of a very brief notice near the end of the annual Social Security Administration statement of benefits.
The Medicare Rights Center and other advocacy groups have proposed legislation that would require the federal government to notify people approaching eligibility about enrollment rules, and how Medicare works with other types of insurance. The legislation the Beneficiary Enrollment Notification and Eligibility Simplification Act, also would eliminate coverage gaps now experienced by enrollees during the Initial Enrollment Period and General Enrollment Period. The legislation was introduced in Congress last year, and will be reintroduced this year.
In the meantime, Mr. Baker proposes a simple rule of thumb to help people approaching Medicare eligibility to avoid costly errors.
If you are eligible for Medicare, you should really consider it to be your default, primary coverage. If you are going to decline Medicare, think very carefully and take the time to really understand all the rules.
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What If An Employer Gives Me Money To Buy My Own Health Plan
A note about individual coverage: youll qualify for an SEP if you delayed Part B because you had employer-sponsored coverage through a group health plan . This is a specific type of insurance plan sponsored or run by your employer. It includes coverage your employer offers you through an insurer, and plans purchased from the Small Business Health Options Program marketplace.
Instead of offering GHP coverage, some employers provide you money to buy your own health insurance. They can reimburse you directly, in which case the money is taxed, or through a Qualified Small Employer Health Reimbursement Arrangement or an Individual Coverage Health Reimbursement Account . Coverage you buy on your own does not qualify you for the Part B SEP even if an employer paid for some or all of it. If you have individual coverage, you should sign up for Medicare when youre first eligible, and can enroll during your initial enrollment period or the general enrollment period.
Josh Schultz has a strong background in Medicare and the Affordable Care Act. He coordinated a Medicare ombudsman contract at the Medicare Rights Center in New York City, and represented clients in extensive Medicare claims and appeals. In addition to advocacy work, Josh worked on federal and state health insurance exchanges at the technology firm hCentive.
Contributions to healthinsurance.org and medicareresources.org represent only his own views.
If The Employer Has Fewer Than 20 Employees
The laws that prohibit large insurers from requiring Medicare-eligible employees to drop the employer plan and sign up for Medicare do not apply to companies and organizations that employ fewer than 20 people. In this situation, the employer decides.
If the employer does require you to enroll in Medicare, then Medicare automatically becomes primary and the employer plan provides secondary coverage. In other words, Medicare settles your medical bills first, and the group plan only pays for services that it covers but Medicare doesnt. Therefore, if you fail to sign up for Medicare when required, you will essentially be left with no coverage.
Its therefore extremely important to ask the employer whether you are required to sign up for Medicare when you turn 65 or receive Medicare on the basis of disability. If so, find out exactly how the employer plan will fit in with Medicare. If not, ask for that decision in writing.
Note that in this situation, signing up for Medicare Part B when you also have employer insurance will not jeopardize your chances of buying Medigap supplemental insurance after the employment ends. When Medicare is primary to the employer plan, you have the right to buy Medigap with full federal protections if you do so within 63 days of the employer coverage ending.
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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.
How Does Medicare Work With Employer Insurance
More and more people are starting to work past the traditional retirement age of 65 and continue to get healthcare benefits through their employer. When this happens, and they also have Medicare benefits, questions arise. Understanding how Medicare works with your employers health insurance benefits or your spouses job can help you decide if you want to sign up for Medicare when you become eligible or wait.
The first thing you want to think about is whether Medicare will be the primary or secondary payer to your current insurance through your employer. If Medicare is primary, it means that Medicare will pay any health expenses first. Your health insurance through your employer will pay second and cover either some or all of the costs left over. If Medicare pays secondary to your insurance through your employer, your employers insurance pays first. Medicare covers any remaining costs.
Depending on your employers size, Medicare will work with your employers health insurance coverage in different ways. If your company has 20 employees or less and youre over 65, Medicare will pay primary. Since your employer has less than 20 employees, Medicare calls this employer health insurance coverage a small group health plan. If your employers insurance covers more than 20 employees, Medicare will pay secondary and call your work-related coverage a Group Health Plan .
Delaying Medicare Coverage
Medicare and COBRA
I Am About To Turn 65 My Spouse Is 60 And Still Working We Are Both Covered Under Her Employers Health Plan Do I Have To Do Anything With Regard To Medicare This Year
A person with group health coverage through a current employer may be able to delay enrolling in Part A and Part B until that coverage ends, and wont face penalties for enrolling later, but only if the employer has 20 or more employees. If your wifes employer has at least 20 employees, you may want to enroll in Part A but delay enrollment in Part B until your group coverage through your spouses employer plan ends.
If you are already receiving Social Security benefits, you will be automatically enrolled in Part A and Part B when you turn 65. If you do not want to pay a premium for Part B benefits now because you have comparable coverage under your spouses employer plan, you will need to let Social Security know that you want to delay Medicare Part B enrollment. You can contact Social Security about this beginning three months before you turn 65. Otherwise, Medicare will assume you want to enroll in Part B and the monthly premium will be automatically deducted from your Social Security check.
If the employer has fewer than 20 employees, you should sign up for Part A and Part B when youre first eligible or you will face late enrollment penalties.
If you do delay Part B enrollment because you are covered under your wifes plan, remember to sign up for Part B once her coverage ends. That way, youll have continuous coverage and wont face a late enrollment penalty for Part B.
When To Apply For Medicare: Whats The Initial Enrollment Period
For most people, the Medicare Initial Enrollment Period is a seven-month period. It starts three months before the month you turn 65, includes your birthday month, and goes three more months after that. So if your 65th birthday is in November, your IEP runs from August through February.
Your IEP is different if youre not yet 65, but you qualify for Medicare by disability. For example, you might be automatically enrolled during your 25th month in a row of receiving Social Security disability benefits.
Learn how enrollment works if youre under 65 but eligible for Medicare through disability.
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When You Must Enroll In Medicare Part B
You may be required to get Medicare Part B even when youre still working. There are two situations in which youmust get Part B when you turn 65.
In each of the above cases, you wont qualify for a Special Enrollment Period and cannot delay enrolling without incurring late enrollment penalties.
Additionally, some employer plans will automatically become secondary to Medicare when you become eligible. In this case, Medicare becomes your primary insurance and would pay first. If you do not have Medicare and need health care, you would essentially have almost no coverage from your employer plan. One such plan that operates like this is the militarys TriCare for Life.
What If I’m Still Working And I’m Covered Through My Employer’s Health Insurance
In most cases, you don’t have to enroll in Medicare if you’re still working and covered by your employer’s plan. That is, you won’t pay a penalty in the form of higher premiums if you wait until you stop working to enroll in Medicare.
However, because most people pay no premiums for Part A, it costs you nothing to enroll right away, even though you may not need the coverage right away.
If your company has 20 or more employees, your employer coverage is primary that is, it pays claims first. If your company has fewer than 20 employees, Medicare pays first.
When you do stop working, you have 8 months to enroll in Medicare Part B and 63 days to enroll in Medicare Part D after your employment ends. Any later than that and your premiums may be higher when you do enroll.
Note: If you defer your enrollment in Part D, you will need to provide proof that your employer’s prescription drug coverage is “creditable.” To do this, you submit a Creditable Coverage Certificate, which your employer group is required to provide.
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When You Should Consider Enrolling In Medicare Part B
If you qualify to delay enrolling in Medicare, deciding to do so is a personal choice.
Some may choose to delay, and for others, it may still be a good fit for your health and lifestyle to enroll in Part B. Consider the following when trying to decide whether to enroll in Part B or delay while still working:
- Is Medicare less expensive than your current health insurance?
- Does Medicare offer better coverage than your current health insurance?
- Do you want to keep your current insurance but also take advantage of Medicare benefits
- Do you want to enroll in either a Medigap or Medicare Advantage plan?
- Is your prescription drug coverage considered creditable by Medicare?
Answering the above questions can help you decide whether or not to delay enrollment. Its important to carefully consider the last item regarding prescription drug coverage. While most employer coverage is considered creditable, you should still verify if it is or could end up facing a late enrollment penalty for Medicare Part D.