Many people who are still working wonder whether it is required to enroll in Medicare when turning 65. It is important to know where you stand as failing to meet certain enrollment requirements can result in penalties down the road.
Whether you are required to enroll in Medicare at 65 will depend on your individual circumstances. In this guide, you’ll learn in which situations you are required to enroll and which you are not.
If you become eligible when you turn 65 you can sign up during the seven-month period that:
- Begins 3 months before the month you turn 65
- Includes the month you turn 65
- Ends 3 months after the month you turn 65
If you fail to sign up for Medicare on time, you risk a 10 percent surcharge on your Medicare Part B premiums for each year you go without coverage upon being eligible. Because Medicare Part A is usually free, a late enrollment penalty doesn’t apply to most people.
Whether this particular set of rules applies to you when you turn 65 will depend on several factors including, if you are still working and–if so–how large your employer is.
If You Are Retired at 65
If you are retired at the age of 65 you will most likely need to sign up for Medicare at the age of 65. Those that don’t do so when they first become eligible are subject to late penalties.
If you are a retiree with a retiree health plan provided by a former employer, then you need to sign up for Medicare Parts A and B. Medicare is usually required in this circumstance because it is primary to retiree health plans. The plans often work well together, providing a substantial amount of coverage.
If you are a retiree whose former employer doesn’t offer retiree coverage, you likely have an individual health insurance policy through the ACA marketplace exchange.
In this situation, it is mandatory to enroll in Medicare unless you are one of the few people who pay a premium for Part A. If this is you, it is still important to enroll at the age of 65 to avoid delayed coverage and loss of social security benefits.
If You Are Still Working
Many people are no longer employed at age 65 and rush to enroll in Medicare the moment they are eligible. But, if you’re still working at 65 and you have health insurance through your employer, you may not need to enroll in Medicare right away. Whether you need to sign up for Medicare when you’re first eligible will depend on the size of your employer.
Your Employer Has 20 or More Employees
If you have group health insurance from an employer with over 20 employees that you or your spouse actively works for after you turn 65, you can delay enrolling in Medicare until the employment ends or the coverage stops, whichever comes first. You can do so without incurring any late payments if you enroll later.
When the employer-sponsored coverage ends, you’re entitled to a special enrollment period of up to eight months to sign up for Medicare.
It’s important to be aware of what is meant by “active employment”. You or your spouse must be actively working for the employer that provides your current health insurance to be able to delay Medicare enrollment and qualify for special enrollment later on. This means that you can’t delay Medicare enrollment without penalty if your employer-sponsored coverage comes from COBRA or retirement benefits, as by definition, these do not count as active employment.
The law requires employers with over 20 employees to offer you and your spouse the same benefits that it offers to younger employees. You have the ability to choose whether to:
- Decline the employer coverage and rely solely on Medicare
- Accept the employer health plan and delay Medicare enrollment
- Have both the employer coverage and Medicare at the same time
It is recommended to sign up for Part A regardless of how good your employer coverage is. This is because Medicare Part A is free so long as you’ve worked for 10 years in the United States. If you have an inpatient hospital stay, Part A can help to reduce your spending under your group health plan.
You’ll want to be aware of the impact of enrolling in both the group plan and Medicare Part B. In this situation, the employer-sponsored plan will always be primary, meaning that it settles medical bills first and that Medicare only pays for services that it covers but the employer plan does not. As a result, unless your employer provides very poor coverage, you’ll be paying a monthly premium for Medicare with little to no return.
Also, by enrolling in Medicare Part B while you still have employer coverage, you could be forfeiting your right to buy Medicare supplemental insurance (Medigap) with full federal protections once your employment ends.
Insurance companies are prohibited from refusing to sell you a Medigap policy and from charging higher premiums based on your health or pre existing medical conditions if you buy the policy within six months of enrolling in Part B. However, if you attempt to buy a Medigap policy outside of that six-month window, insurance companies are able to do both, with exceptions in very limited circumstances.
Your Employer Has Fewer Than 20 Employees
The laws that prevent large employers from requiring or persuading Medicare-eligible employees to drop their employer-sponsored plan and sign up for Medicare do not apply to companies that employ fewer than 20 people. In this situation, the employer is the one who decides.
If the employer requires you to enroll in Medicare, then Medicare automatically becomes primary coverage and the employer-sponsored plan becomes secondary coverage. This means that Medicare settles your medical bills first, and the employer plan only pays for services that it covers but Medicare doesn’t not. In this case, if you fail to sign up for Medicare when required, you will essentially be left with no coverage.
It’s very important to ask your employer whether you are required to enroll in Medicare when you turn 65. If required, find out how the employer-sponsored plan will fit in with Medicare. If not required to sign up for Medicare, ask for that decision in writing.
Be aware, that in this situation, signing up for Medicare Part B when you have employer insurance will not affect your chances of buying Medigap insurance after the employment ends. When Medicare is primary to the employer plan, you have the right to buy Medigap with full federal protections so long as you do so within 63 days of the employer coverage ending.
The Texas Medicare Agency
Knowing how Medicare works can be a complicated process. Coverage 2 Care helps you understand your Medicare coverage options so you can be confident about your choice. Our licensed agents will help you find the best plan for you while saving money in the process.
Contact us today to learn how our Medicare services can get you the benefits you deserve.