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Do You Have to Sign Up for Medicare?

In this article, we will isolate our thoughts to when you are first turning 65 years old. If we did not touch on your specific situation, please call one of our advisors for additional information.

When coming up to your Medicare eligibility, many people ask the question, Is it mandatory to sign up for Medicare at 65? Short answer? Maybe.

There are definitely some situations where it is mandatory to enroll, but there are also many times that it is not required of you to enroll, AND there will not be a penalty involved. We know, hard to believe because you hear so much about the famous “Medicare penalty if you don’t do something correctly” Read on.

We’re going to address some of the most common situations and let’s see if you can identify your situation. If not? Call us and ask one of our advisors for assistance. Also note that this article won’t get into describing “what” Part A and Part B are.

I’m turning 65 (or my spouse is) and still working for an employer with OVER 20* employees.

As long as you are on a group plan provided to you through “active employment coverage” (meaning you are covered through your workplace or your spouse’s workplace insurance and that spouse is actively working), AND the employer has over 20 employees AND you PREFER to keep your employer insurance, you may do so. Absolutely verify with your human resources department that your coverage (including your prescription drug coverage) is what is called “creditable coverage” according to Medicare. If you get the all clear? You may stay enrolled into your group plan. You will not be penalized for a late enrollment into Medicare’s Part B.

How this relates to Part A of Medicare. If you stay on your group plan and you are on an HSA compatible plan and would like to continue contributing to that account, do NOT enroll in Medicare’s Part A. Part A is not considered a high deductible plan, thus it eliminates your ability to contribute. **Many people just sign up for Part A because “it’s free” or “I thought I had to.”

Caveat – if you are working AND collecting Social Security benefits prior to age 65, you will be automatically enrolled into Parts A and B. You will be required to keep Part A coverage with Medicare but you may rescind Part B coverage because you have your group insurance. Note that you will NOT want to contribute to the HSA any longer at that point if you are collecting your social security benefits.

Things to think about and/or compare

So, just because you HAVE employer insurance, doesn’t always mean that it’s your best place to secure your health insurance coverage. You should compare the premiums that you are paying, what the coverage provides you, what the co-pays, co-insurance are, etc. etc. Call us to run through this if needed. It’s just not a “oh, I have group insurance, I don’t want or need Medicare”. It’s just not that simple! Imagine that…!

*These numbers change from 20 to 100 when we are talking about Medicare coverage and those on Social Security Disability Income benefits.

I’m turning 65 (or my spouse is) and still working for an employer with UNDER 20 employees

If this is you, you have to sign up for Medicare Parts A and B. Sorry, but you do.

Why? Because Medicare becomes your primary insurance carrier if you are eligible for Medicare and on a small employer’s health insurance plan. See this Medicare guide for the official “who pays first”.

If you do NOT get your Part B in this case, you could be on the hook for claims as your group insurance goes to the secondary slot in terms of payors. Remember, you are ultimately the responsible party for knowing these rules; so be careful.

Cobra coverage and Medicare

We have people call us and say “Is it mandatory to sign up for Medicare at 65? I am retiring and my employer has offered to give me (meaning the employer will pay for it) 12 months of Cobra coverage so I’m all set until I’m 66, right?”

It sounds blissful, but no.

When you take Cobra coverage and you are “eligible for Medicare” – that means age 65; that Cobra coverage becomes the primary insurance to Medicare Parts A and B (go back above and see the “who pays first guide” again).

Real world? That means you may tell your employer thank you very much, but you still need to get your Medicare Parts A/B in place. If you don’t? Well, if you have a large claim, the Cobra carrier (remember they are secondary now) could very well reject 80% of the claim as they are the “secondary”. Don’t find out the hard way. We see this issue happening more and more and more as people work longer. Call us for a quick assessment before you make a mistake. And, watch our YouTube video explaining Cobra and Medicare. Super important to understand how it works.

Turning 65 and have retiree coverage?

If a beneficiary is eligible for a retiree plan through their or their spouses previous employer, that retiree plan comes secondary to Medicare. It is important for retirees to still have Medicare A and B active (unless there is a special circumstance, like FEHB coverage). Typically, the retiree plan will have contacted you and walked you through what you need to do in order to enroll into their plan. And, that typically requires you to enroll into Medicare’s Parts A and B.

Sometimes, the retiree plan is a good secondary plan to Medicare but it is still important to weigh your options to make sure you are not overspending and you are getting the coverage that you need.  We do see the classic retiree plans get a bit worse and worse as time goes by so it’s important to pay attention to your co-pays and total premiums so that you can make a good comparison to what you can secure in the “open market” if you will.  Often, a retiree medical plan will have stronger prescription coverage (i.e. better coverage) so pay extra attention to that area.

Have ACA/Marketplace coverage at age 65?

You’re an easy one. Medicare is going to be the next step for you as you turn 65 years old if you have Marketplace coverage currently.

If you are receiving a subsidy on that current plan, it will stop the month that you turn 65 years old. You will then start paying Medicare Part B premiums.  If you do not receive a subsidy? You’re typically the very happy camper when you sign up for Medicare’s coverage and the ancillary products. You’ve saved money and have better coverage.

Marketplace coverage IS a situation where if you stayed with that coverage and didn’t file for Medicare’s A and B, and then went to get it later, you would be looking at a penalty situation.  Marketplace insurance is not considered credible coverage by Medicare’s standards, thus you’d be penalized for the late enrollment.

Method to the Madness

We don’t see penalties occur that often, but you can see from some of the above situations why it’s so important for you to check in with us at age 64.5 to be sure you’re doing things properly. There seriously is a right time to do the right thing related to Medicare.

We’re here to teach you the method to the madness.

Medicare Open Enrollment

This article is an overview of the different Medicare Enrollment Periods. “Medicare Open Enrollment” is a term that is loosely thrown around. If you haven’t figured out if you need Medicare (despite what everyone else is telling you if you are turning 65). Check out our “Is Medicare Mandatory?” article. Once you have concluded that you do indeed need to enroll into the Medicare system, how do you actually get there? Shocker, there are a couple different ways you can start the Medicare enrollment process. Each of the different periods listed below will all depend on your individual situation.

  1. The Initial Election Period
  2. The Annual Enrollment Period
  3. The Special Election Period
  4. The General Election Period

Let’s break down each election period so that you can better understand which would fit your situation.

The Initial Election Period

This is the period of time that everyone seems to know a little bit about. It’s the “it’s something to do with three months and my birthday” period. You’re close, let’s explain what this one is and how it works.

This initial election period runs during the three months prior to your 65th birth month, includes your actual 65th birthday month and also runs for the three calendar months after your birth month.

So, that’s a seven-month window. It means that you are eligible for your Initial Medicare Enrollment Period simply because you are coming up to age 65. Note that this seven-month window occurs only as you approach age 65.  We have plenty of people that come to us saying that they are turning 68, want to enroll in Medicare and “know I need to do something before my birthday”.  No, you don’t. You rolled past that window in this case three years prior.

Let’s break down an example of someone using this enrollment window.

Jan’s birthday is June 19. She is a person that wants to enroll into Medicare’s Parts A and B. When is her coverage effective? It would be effective June 1. Medicare is always effective on the first day of the month UNLESS your birthday happens to fall on the first of a month. If that is you? Your Medicare start day will be moved up one full month. So, if Jan’s birthday were June 1 vs June 19, her Medicare would begin on May 1.

Because Jan wants Medicare, we would recommend that she go online and enroll anytime during the months of March, April or May and her coverage would begin on June 1.

Let’s say that Jan forgot to enroll during those three months and went online and enrolled on June 5 thinking that she’d get it all set before her birthday of June 19. When would her coverage begin?  It would start July 1.

Note that if Jan enrolled in the months of June, July, August and September, her coverage WILL have a delayed start date. (see chart above)  This is something to be aware of when you are turning 65 and possibly retiring and leaving employer insurance during the same months. It takes a bit of strategy to be sure that you are enrolling in the right month to ensure that your coverage begins when you want and need it to.

General advice. If you know that you want to be enrolled into Medicare when you turn 65, go online at the beginning of your enrollment window and get it filed. That gives you plenty of time for processing.

Annual Enrollment Period (Oct 15th – Dec 7th)

This is the timeframe that everyone calls the “Medicare Open Enrollment”. This period is simply for individuals who are already enrolled into Medicare and they have the opportunity to either,

  • Enroll into a Medicare Advantage Plan.
  • Change from one Medicare advantage plan to another.
  • Enroll into a stand alone prescription drug plan.
  • Change from a stand alone prescription drug plan to another.

You can make these adjustments every year. As long as you enroll into the new plan between October 15th – December 7th, the new plan will start January 1st of the following year.

We touch on Medicare Advantage Plans in another Article that we have written and to make learning as easy as possible, we have also created a YouTube Video.

Our YouTube channel is full of educational videos you can enjoy at your own pace. Become a Medicare Pro without even speaking to anyone! However, if you still cant find the answer you are looking for, don’t hesitate to give us a call!

The Special Election Period

So, if you didn’t sign up for Medicare during your initial election period as you were approaching age 65, when is your next opportunity? That’s called a Special Election Period. This Special Medicare Enrollment Period is often for special life circumstances that occur: moving, losing coverage, gaining Medicaid as examples.

We’re going to focus on the most common situation we see as our specialty is transitioning people to the Medicare system. For many people that means at age 65 but for many others, it involves helping people take the leap from employer coverage over to Medicare.

So, this special enrollment period is very often used for those people that are retiring and leaving employer provided coverage for example. Meaning, they had health insurance coverage provided to them through either their actively working or via their spouse actively working.  Understand that there is an actual method to the madness of enrolling into Medicare when you are beyond age 65 and now want to retire and join Medicare for your health insurance.

Joe is 67 years old and has been on his employer coverage for 30 years. He’s now ready to retire and his company offers no retiree health insurance plan. So, he’s going to need to enroll into Medicare. Joe had also called us as he approached age 65 and we advised him to ONLY enroll into Medicare Part A online as he didn’t need Part B at that point.

So, Joe calls us back at 67 years old and says “I’m ready to retire, what do I need to do”?  At this point, Joe is going to tell us the start date that he’ll need to secure with Medicare. Once we know that, we’ll provide Joe with an employer verification form that he’ll need to take into his employers office and have them sign off that he has indeed had coverage with that employer (an employer with over 20 people, also) since he was 65 years old. That was the reason he didn’t need Medicare Part B at that point. So, the employer will verify that he had that coverage.

Joe will take that form along with an application for Medicare’s Part B form (remember, he already has Part A so he is adding Part B). He will then take those two forms into his local Social Security office and file the paperwork and request his effective date needed. **This is how Joe will NOT have a late enrollment penalty for a late enrollment into Medicare Part B. He actually has an eight-month period of time to enroll into Part B after leaving his employer coverage. However, it is not typical that someone ends their employer coverage and has no coverage for those eight months.

Once that process occurs, we start working with Joe to put into his place the coverage that he needs to complete his Medicare “package”.

Please note that Cobra coverage is NOT considered active worker insurance and therefore you really need to know that Medicare and Cobra don’t mix.  Here is a situation that DOES happen fairly often.

Sam is 67 years old and going to retire just like Joe. Instead of calling us, he learned from HR that he could have Cobra coverage for 18 months and his employer has generously offered to provide it at no cost to Sam. So, feeling that he received a true gift, Sam decided to delay his enrollment into Part B because he had his same “employer coverage”.  Unfortunately, in the eyes of Medicare, Cobra does not operate like “employer” coverage.

Sam called us after he had his Cobra coverage for 15 months and someone told him that he could get a late enrollment penalty for not getting his Part B coverage in time. That person was right!

General Election Period

The simplest way to explain the General Election Period is to say that it exists for the people that made mistakes and didn’t sign up during the initial window of time and then they didn’t have a situation (such as leaving employer coverage) that allowed them to enroll during the special election window.

Sam from above would be required to enroll into this General Election Period. Why? Because he didn’t realize he needed to have Part B when he began his Cobra coverage. He thought the coverage was the same as his work coverage but it was ‘technically’ Cobra coverage. He learned this 15 months after he started his Cobra coverage.  He needed to have applied for Part B within the 8 month window of leaving his employer plan. Since he did not, he’ll need to wait until the General Election Period window begins.

January 1 – March 31

This is the window annually that is called the General Election Period. This is when people like Sam will go into the Social Security office and start their Medicare enrollment into Part B. Their coverage, however, will not begin immediately.

So, let’s say Sam’s Cobra coverage ended in October. He learned he made a mistake and didn’t enroll into Part B at the right time. How he is delayed further as his coverage ends in October and he can’t file for Part B until January AND his coverage won’t start on January 1. If he enrolls during January, his coverage will begin on February 1. If he enrolls in February? His coverage will begin on March 1, etc.

And, in addition to having a gap in coverage, he may receive a late enrollment penalty that will stay with him every month of his life while being enrolled into Medicare.

This section covered common situations with each election period referenced. If you move and have a Medicare Advantage plan, you have special time windows to get a new plan in your new zip code. Remember that those plans are network based so you would have the ability to change plans. Please call us before you move so that we can help you avoid mistakes. If you move to another state and call us in 6 months to tell us, let’s just say that there won’t be a happy ending.

There are many, many nuances to these enrollment periods that we highly encourage talking with one of our advisors before you have the chance to make a mistake!

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