Many people today keep working beyond age 65 – the age when most people become eligible for Medicare. If you’re still working and your employer offers health coverage, do you need to enroll in Medicare? Should you do so?
The answers can be complicated – and there may be different answers for the different “parts” of Medicare. Here’s a closer look:
Medicare Part A. Part A of Medicare covers hospital visits and nursing home stays, as well as certain types of care provided by home health agencies. It’s usually smart to go ahead and enroll in Part A even if you’re still working, since it’s free for most people and it may supplement your employer’s insurance.
However, you need to be careful, because sometimes enrolling in Part A can affect your employer-provided insurance. You’ll want to ask your employer (or your spouse’s employer, if that’s where you get your coverage) whether your current insurance will change if you enroll in Part A.
This is especially true if you have a high-deductible health plan with a health savings account, since enrolling in Medicare can make it difficult or impossible to make further contributions to such an account.
Medicare Part B. Medicare Part B covers doctor visits, lab tests, and other outpatient and preventive care. It has a monthly premium that changes each year; the monthly premium is $104.90 for most people in 2014.
If you work for a company that has fewer than 20 employees, it’s generally wise to go ahead and sign up for Part B. If you don’t, then your employer’s insurance plan may be able to refuse to cover you for any services that Medicare would have covered. That means that you may have to pay for those services out of your own pocket.
If you work for company with 20 or more employees, though, you can generally wait to sign up for Part B, because your employer’s insurance plan must continue to cover you as before.
As a general rule, if you don’t sign up for Part B when you’re first eligible, and you decide to sign up later, you’ll pay a penalty – an extra 10% premium for each year that you delayed signing up after you became eligible. However, if you delayed signing up because you were working and covered by your employer’s insurance, there’s an exception. As long as you sign up within eight months after you retire, there’s no penalty.
(If the size of your company is anything close to 20, be sure to ask how many employees it has for Medicare purposes. The government has its own methods for counting “employees” that can be very different from just looking at how many people are sitting in an office.)
Medicare Part D. Part D covers prescription drugs. Even if you choose not to enroll in Part B, you can still enroll in Part D. However, if your employer offers a prescription drug plan, there are several issues to consider before you switch.
One is whether your employer’s current plan or a Medicare Part D plan is better for you. Different plans cover different drugs, and pay different portions of the cost for various types of drugs. You’ll want to make a list of the drugs you currently take (or might be likely to take in the near future), and see which plan makes the most sense for your needs.
Another issue is whether you’ll have to pay a penalty if you don’t sign up for Part D now, but do so at some point in the future. Your employer’s plan should send you a letter telling you whether or not your current coverage is “creditable” – meaning that it’s considered equal to or better than what Medicare is offering. If your current coverage is “creditable,” then you can keep it and not have to worry about a penalty. But if your current coverage is not creditable and you don’t sign up for Part D right away, then you’ll have to pay a penalty if you sign up later, similar to the penalty for delaying in signing up for Part B.
If you’re thinking of signing up for Part D, a final consideration is whether you can drop your current drug coverage without losing your other employer-provided insurance. Be sure to ask your employer about this.
Social Security. If you’re currently receiving Social Security benefits, you don’t need to do anything to enroll in Medicare. You’ll be automatically enrolled in Parts A and B effective the month you turn 65.
If you’re not receiving Social Security benefits and you want to sign up for Medicare, you can call the Social Security Administration at 800-772-1213 or enroll online at www.socialsecurity.gov/medicareonly.
If you’re receiving Social Security benefits and you don’t want to sign up for Part B, fill in the box on the back of your Medicare card declining Part B coverage and mail it back to the address listed. You’ll be mailed a new card.
As you can see, Medicare decisions are complicated. If you have any questions, we’d be happy to help you.