More and more people are delaying Medicare enrollment and continuing to work. While working past 65 can help you put away more savings for retirement, you could inadvertently be penalized for not enrolling in Medicare at the proper time. Here are important things to understand before you make the decision to keep working. For more in-depth information, we encourage you to speak with your benefits representative at work, call Social Security at 800-772-1213, or contact one of our Medicare specialists at Health Insurance Options, who would be happy to answer your questions. Simply call 509-353-0476 , Monday through Friday, 9 a.m. to 4 p.m., Pacific Time.
The Employee Retirement Income Security Act of 1974 (ERISA) is a law mandating that people who work beyond age 65 must still be offered the same health insurance benefits as younger people working for the same employer. (This law also applies to their dependents.) However, the law only applies to employers with 20 or more workers. If your current employer has fewer than 20 employees, you may be required to enroll in Part B at age 65.
Part A can provide extra coverage for hospital stays in addition to your group insurance. If you are receiving Social Security benefits, you are automatically enrolled at age 65. If you are not receiving benefits, you would need to sign up for Part A.
Chances are, you or your spouse has worked long enough that sufficient payroll taxes have been paid so there would be no premiums. This requires 10 years or 40 quarters of work history over your lifetime. This is called “premium-free Part A”. If you did not contribute enough payroll taxes, you may qualify for premium-free Part A through the work record of a current, divorced, or deceased spouse.
Some people consider delaying Part A until a later date. These are people who contribute to a Health Savings Account (HSA) or those who have to pay a premium for Part A. CMS recommends that you contact your employer or union benefits administrator before delaying Part A or Part B to find out how your current insurance works with Medicare. Your employer coverage may require that you enroll in Part A and Part B to get your full coverage.
And keep in mind, if you do not enroll in Part A or Part B during your Initial Enrollment period, you will have to wait to sign up. This could cause a gap in coverage. What’s more, if you have to buy Part A and you do not buy it when you first become eligible for Medicare, your monthly premium may go up 10% for each 12-month period you could have had Part A but did not enroll. And, you will have to pay the high premium for twice the number of years you did not sign up.
This is a seven-month window that includes the three months before you turn 65, your birthday month, and the three months following your birthday. Just call Social Security, which handles Original Medicare enrollment, at 800-772-1213 and schedule an appointment for an interview. The interview can be done on the phone or at your local Social Security office.
If you currently have an HSA account through work, current IRS rules state that you can draw on funds already in your account, but you cannot add to them.
It depends on a few things, though. You or your spouse must still be actively employed by the employer that provides your health insurance. When you have your interview with Social Security during your initial enrollment period, ensure that an official puts into your record that you have declined Part B because you have health insurance through the current employment of you or your spouse. When you do retire, you will be entitled to a special eight-month enrollment period to sign up for Part B without incurring a late penalty. If you do not sign up during this time, your Part B premiums may increase by 10% for each 12-month period you were eligible for Part B but did not claim it.
However, if you or your spouse works for a company that has fewer than 20 employees, the employer may require you to sign up for Part B when you turn 65. If so, Medicare would become your primary coverage and your employer’s group insurance would become secondary. It is a good idea to discuss this with your benefits representative before you make your decision.
Your employer plan can tell you whether your coverage is creditable, which means that your coverage is expected to pay on average as much as the standard Medicare prescription drug plan. If that is the case, you will not need to enroll in a Part D drug plan at age 65. When your employer coverage ceases, you' will be entitled to a two-month special enrollment period to sign up for a Part D plan without penalty. If it is not creditable, you would need to enroll in Part D during your initial enrollment period at age 65 to avoid late penalties.
You can not delay Part B due to COBRA coverage or retiree benefits. You can only delay Part B if you or your spouse is actively employed and part of a group health plan. Waiting until your COBRA or retiree benefits expire to enroll in Part B could mean you will have to pay late enrollment penalties.
If your COBRA or retiree drug coverage is considered creditable by Medicare, you won’t need to enroll in Part D until these benefits end. And again, you will be entitled to the two-month special enrollment period mentioned above.
We hope this information helps you make an informed decision about working past 65 and your Medicare coverage. If you have any questions, don’t hesitate to call one of our Medicare specialists at 509-353-0476