Medicare Special Enrollment Eligibility
Many people continue working past age 65 and are eligible for insurance through their employer. If this applies to you, you might wonder if you have to sign up for Medicare when you turn 65 and what your options are. First of all, you need to understand some of the technical terms and enrollment periods for Medicare. Most people will want to sign up for Medicare during the Initial Enrollment Period (IEP). This starts three months before you turn 65 and ends three months after you turn 65.
What is the Medicare Special Enrollment Period?
You are eligible for Medicare Special Enrollment Period (SEP) if you have health insurance through an employer or union or you have it through your spouse’s employment. Your SEP will be eight months long. It begins the month after your employment ends or the month after your insurance through your employer ends, whichever comes first. In most cases, you wouldn’t have to pay a penalty if you sign up during the SEP. Some volunteers working in a foreign country may also be eligible for the SEP.
Should You Delay Enrollment?
If you have health insurance through your employer and you want to keep it, you might want to delay signing up for Medicare Part B, which covers outpatient, preventive medical care. Those employed in a company with 20 or more employees may wait to sign up for Medicare Part B, since the employer’s plan will pay first. Those at smaller companies must sign up for Medicare Part B at age 65, since the employer’s plan is considered to pay second. Sometimes you can get a waiver, however, be sure to have everything in writing. Most people will go ahead and sign up for Medicare Part A, which covers hospitalization. For those who have worked for at least 10 years and paid Medicare taxes, Medicare Part A is free.
Some people might delay signing up for Medicare Part A if they want to be able to contribute to a health-savings account (HSA). Keep in mind that you cannot receive Social Security and decline Medicare Part A. Paying into an HSA can be beneficial for taxes. You can use an HSA to pay healthcare costs even after you leave your job. Stop contributions to your HSA in the six months before you plan to apply for Medicare. This will help you avoid a penalty on your taxes.
Take note that COBRA plans or retiree health plans do not count as insurance based on your employment. You would have to sign up during the IEP to avoid penalties. If you miss the IEP and are not eligible for an SEP, you would sign up during the Medicare General Enrollment Period. This is from January 1st through March 31st every year. Coverage begins July 1st, and you may have to pay penalties. For Medicare Part B, the penalty is an extra 10% on your monthly premium for every year you could have been signed up but weren’t. The penalty lasts as long as you have Medicare Part B.
It’s a good idea to check in with a licensed broker to be sure that you will be eligible for an SEP.
Feel free to give us a call, so we can discuss your circumstances and help you come up with a plan for healthcare coverage when you retire, 1-800 942-2236 TTY 711, Mon – Fri, 8:30am – 5pm PST.