Enrolling In Original Medicare
When it comes to Original Medicare, enrollment could be a piece of cake. If youre already receiving Social Security or Railroad Retirement Board benefits and youre a U.S. resident, the government automatically enrolls you in both Medicare Part A and Medicare Part B at age 65. Three months prior to your 65th birthday, your Medicare card will arrive in the mail with instructions.
At this point, youll have the option to turn down Medicare Part B . But you probably wont want to do that unless you have coverage from your own or your spouses current employer, and the employer has at least 20 employees. Thats a valid reason for delaying your enrollment in Medicare Part B.
If you decide to not enroll in Part B, but plan to enroll at a later date, know that you could end up having to pay a higher premium 10% higher for each year you could have enrolled, but didnt. The penalty doesnt apply, however, if the reason you didnt initially enroll in Part B coverage was that you had employer-sponsored health insurance from your current employer, including TRICARE from current military employment.
If you havent yet enrolled in Social Security but are eligible and want to begin receiving benefits, you can enroll online, or at a local Social Security office. Be sure you understand how your benefits depend on the age at which you start receiving them, and theres no right or wrong answer in terms of when you should activate your benefits.
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.
You Can Safely Delay Medicare Part B Enrollment If:
If you meet the two conditions, you can delay enrolling in Medicare for up to eight months after you have stopped working at the job that provides your current insurance.
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What Happens If I Decline Medicare Coverage
If you work for an employer with more than 20 employees and get insurance through that employer, you can decline Medicare with no penalty, as long as you sign up during your special enrollment period later on.
If you dont have employer-based insurance, or your employer has fewer than 20 employees, declining Medicare now means youll end up paying higher premiums each month when you do finally enroll:
People who have to pay for Part A will see their premiums go up 10%.
For Part B, premiums go up 10% for every 12 months that you dont sign up.
The penalties for signing up late for Part D reflect a complicated formula based on the amount of time you went without insurance and the national base beneficiary premium.
What About Health Savings Accounts
Some individuals who work for a company of 20 or more people may have both a high-deductible health plan and a Health Savings Account . After a person enrolls in any part of Medicare, they are not permitted to contribute to their HSA.
If someone wishes to continue contributing to a HSA, they may delay enrolling in parts A and B until employment stops or their coverage ends. If they enroll within 8 months of either of those events, they wont have to pay a late enrollment penalty.
In addition, premium-free Part A coverage begins 6 months prior to the date a person applies for Medicare, but no earlier than the first month they were eligible. To avoid a tax penalty, a person should stop contributing to their HSA 6 months before they apply for Medicare.
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If Your Or Your Spouse’s Employer Has 20 Or More Employees Then The Group Health Plan Pays First And Medicare Pays Second
didn’t pay all of your bill, the doctor or
should send the bill to Medicare for secondary payment. Medicare will pay based on what the group health plan paid, what the group health plan allowed, and what the doctor or health care provider charged on the claim. You’ll have to pay any costs Medicare or the group health plan doesn’t cover.
Employers with 20 or more employees must offer current employees 65 and older the same health benefits, under the same conditions, that they offer employees under 65. If the employer offers coverage to spouses, they must offer the same coverage to spouses 65 and older that they offer to spouses under 65.
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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When Am I Eligible For Medicare
In general, most people become eligible for Medicare when they turn 65. However, people younger than 65 with End-Stage Renal Disease or Lou Gehrigs Disease are also eligible for Medicare. These, of course, are special scenarios.
For most people, Medicare Part A will be free in retirement. Wondering if youre included in this group? If you worked at least 40 quarters in the United States, and paid Medicare taxes while employed, you should receive Part A at no monthly cost.
If you didnt work or pay Medicare taxes, you may still be eligible for coverage if your spouse did. You and your family worked many years to ensure that your health is covered in retirement, so see this as an added benefit.
While Part A is part of Medicare, it doesnt ensure complete coverage. If youre also wanting outpatient coverage, youll need Medicare Part B as well. If you want Part B, youll have to pay a monthly premium which will depend on the official start date of your Part B, and your income level.
Finally, if youre wanting Part D and a Medicare Supplement policy , you will also pay a monthly premium for this added coverage.
Turning : Should I Stay On My Employers Group Health Plan Or Enroll In A Medicare Supplemental Plan
If youre turning 65 and youll continue working, you face an important decision: should you stay on your companys group health insurance plan or enroll in Medicare and a Medicare supplemental or Medicare Advantage plan?
The question isnt so simple. Your answer depends on:
- Who is paying for your health insurance .
- If you have dependents enrolled.
- The amount of money you earn.
In this article, well help you understand some of the things you should consider when turning 65 and choosing health insurance. Well examine different situations for people who face the same question.
But first: Congratulations! Youve made it.
You may be continuing to work because you enjoy your job and your colleagues, or you might have little choice. In either case, youll enjoy this engaging book by Alain De Botton, The Pleasures and Sorrows of Work. It describes the huge variety of things that human beings do to support themselves and their families from a tuna fisherman off the coast of the Maldives, to a rocket scientist launching a satellite in French Guiana, to an accountant in London.
The diversity of jobs helps to explain why Ive spent a few of days of my life writing this article and why you find yourself reading my prose. So lets make this as fun as possible. Also heres a shameless plug let BenefitsCafe.com be the agent/consultant on your group health plan and well figure this out for you.
IMPORTANT: You can answer many questions by using this handy Medicare worksheet:
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Working For A Large Employer
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 .
Many people with large group health insurance delay Part B but sign up for Part A because it’s free.
“It doesn’t hurt you to have it,” Roberts said.
However, she said, if you happen to have a health savings account paired with a high-deductible health plan through your employer, be aware that you cannot make contributions once you enroll in Medicare, even if only Part A.
Also, if you stay with your current coverage and delay all or parts of Medicare, make sure the plan is considered qualifying coverage for both Parts B and D.
If you’re uncertain whether you need to sign up, it’s worth checking with your human resources department or your insurance carrier.
“I find it is always good to just confirm,” said Elizabeth Gavino, founder of Lewin & Gavino and an independent broker and general agent for Medicare plans.
Some 65-year-olds with younger spouses also might want to keep their group plan. Unlike your company’s option, spouses must qualify on their own for Medicare either by reaching age 65 or having a disability if younger than that regardless of your own eligibility.
Do You Have To Get Medicare If You Are Still Working
Whether you are working or not when you turn age 65, youll still be eligible for Medicare coverage. It is not mandatory to sign up for Medicare. In fact, you may prefer the healthcare coverage offered by your employer. However, if you defer or decline Medicare coverage, you could pay some form of penalty.
Well go over some of the things you might consider before deciding to enroll in Medicare while still being employed.
- limited stays in a skilled nursing facility
If youre eligible for premium-free Medicare Part A, theres often very little downside to enrolling. You may be eligible for premium-free Part A if you paid into Medicare through payroll taxes for at least 10 years of employment.
If you work for a large company with more than 20 employees, a Medicare policy can act as a secondary payer and can help to fill in gaps in your existing coverage without any additional cost on your end.
If you work for a small company or have a health insurance plan through your employer with minimal coverage, enrolling in Medicare may help reduce your medical expenses.
Medicare will often become the primary payer in these cases and may provide better coverage than you currently receive. In fact, your small employers insurance may not cover you if they discover youre eligible for Medicare benefits and havent enrolled.
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Enroll In Medicare Part A Consider Your Hsa First
Some people enroll in Medicare Part A when they turn 65 whether theyre working or not, because Part A is usually premium-free. You earn premium-free Part A by paying into the Medicare program through payroll deductions. You qualify if you or your spouse contributed to Medicare for at least 10 years.
Careful though. Once you get Part A , you can no longer contribute to your health savings account .You may want to delay Part A if you have an HSA and want to continue contributing to it. If you decide to get Medicare and stop contributing your HSA, know that you can still continue to use the funds for qualified medical expenses including some Medicare costs.
When Would I Enroll If I Delay Or Only Take Part A
If you are able to delay enrolling in either all or part of Medicare, you will have a Special Enrollment Period of eight months that begins when the employer coverage is lost or when your spouse retires. During this time, youll be able to enroll in Medicare Parts A & B. You can also enroll in a Part D prescription drug plan. And, after you enroll in Part B, youll be able to enroll in a Medicare supplement insurance plan or a Medicare Advantage plan.
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Enrolling In Medicare Part A At 65
Many people who are covered by a spouses employer plan choose to either wait to enroll until they lose their spouses employer coverage or choose to only enroll in Part A since Part A usually has no premium. You can enroll in Medicare Part A only and choose to delay Part B and Part D, but youll need to ensure you have creditable coverage to avoid paying late premium penalties for Part B and/or Part D.
Enrolling In Medicare Part D
Medicare Part D covers prescription drugs. You can add a stand-alone prescription drug plan to augment your Medicare A and B, or you can choose a Medicare Advantage plan that provides all of the benefits of Medicare A and B, plus prescription drugs and often other benefits as well.
Youre first eligible to enroll in Part D when youre first eligible for Medicare. When you apply, you will enroll in a private plan and must enroll during a seven-month period that starts three months prior to the month that you reach age 65. If you dont enroll during this period, you may pay a late-enrollment penalty that will raise your Part D premium when you do decide to purchase coverage .
If youre Medicare-eligible because youre disabled AND youve reached age 65, you can enroll in a Part D plan, switch Part D plans, or drop your Part D plan during this seven-month period.
If youre newly eligible because youre disabled, you can enroll starting 21 months after you began receiving RRB or Social Security benefits and have through the 27th month to enroll. Your Part D coverage will start at the beginning of your 25th month of receiving RRB or Social Security benefits.
If you dont have Part A and enroll in Part B during the Part B General Enrollment Period, you can enroll in Part D between April 1 and June 30. Or, if you have Part A coverage and then enroll in Part B during the Part B General Enrollment Period, you can enroll in Part D between April 1 and June 30.
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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.