Question: Should I Sign Up for Medicare at 65 when I’m Still Working?

Answer:: Medicare eligibility for individuals begins at age 65. Being enrolled on time ensures that you avoid a costly penalty. You can get a bit more leeway if you’re still working by the time you turn 65. But remember, Medicare is not designed to cover your family. If you want to keep them insured, you will need to get coverage for them through a separate health insurance policy.

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If you fail to sign up for Medicare on time, you’ll risk a 10 percent surcharge on your monthly Medicare Part B premiums. For example, if you’re eligible for Medicare in 2020, but only sign up in 2021 instead, you’ll risk paying 10% more for the yearly premiums from 2020 to 2022.

Interesting fact: If you’re still working at age 65, there are some different rules that apply. For example, if you don’t enroll in Part A before the deadline, you may be required to pay a late enrollment penalty.

Why Double Up on Health Insurance Coverage?

If you’re 65 and have coverage through a group plan with more than 20 employees, you don’t need to enroll in Medicare. Many seniors are no longer employed at 65 and are eligible for Medicare.

If you have an employer with less than 20 employees, you need to enroll in Medicare Parts A and B. Your employer plan may pay less or nothing for your care when it finds out that you haven’t enrolled.

If you are already covered by work health insurance, it is important to enroll in Medicare Part A on time. This way, Medicare can serve as your secondary plan and pick up the tab for anything your work health insurance does not cover.

If you are contributing to a health savings account and would like to continue doing so, you are exempt from Medicare enrollment. Medicare enrollees cannot contribute to a health savings account, regardless of whether or not they have coverage under their employer’s HSA-qualified high-deductible health plan.

You Have a Medicare Special Enrollment Period

One of the benefits of staying on your employer’s healthcare plan if they have 20 or more employees is that you can delay your Medicare enrollment date. If you’re still working and covered by your employer’s plan (specifically as it relates to Medicare Part B, which allows you to avoid paying the Part B premium), you can delay your enrollment in Medicare.

If you’re eligible for Medicare due to your employment status, you may have the opportunity to sign up for Medicare. This is called special enrollment and will start the month after your job coverage ends or the month after you leave your job — whichever happens sooner.

Sign up for Medicare during the eight-month window and you won’t have to worry about paying a premium surcharge for missing the deadline. And if you’re waiting until now to enroll in Medicare because you are covered by your spouse’s employer-sponsored plan, as long as their employer has at least 20 employees, then you’ll also be able to take advantage of the eight-month window to apply.

You may think you’re covered if you’re still employed, but if you lose your job, you could find yourself with a penalty. So if you’re covered under COBRA or a retiree plan, know that you’ll be subject to the Part B late enrollment penalty when you eventually enroll, and you’ll have to wait for the general enrollment period to sign up for Part B instead of being able to sign up during a special enrollment period.

Pay Attention to The Numbers

Deciding whether to enroll in Medicare at age 65 can be a hard choice. If you have a qualified group health plan, usually with a high employer subsidy, then you might not need to participate in Medicare at this time.

Comparing your current health coverage to the benefits that Medicare offers can help, as can looking at all of the costs — including premiums, coinsurance, and deductibles — on both plans.

Medicare is a complicated and confusing topic. But, we’ll make it easy to understand. You might need a Part D drug plan when you sign up for Medicare. However, it’s possible that signing up for Medicare at 65 makes the most sense financially, even if you are entitled to enroll in the future.

What about a Medicare Supplement Plan?

Although Medicare Part A and B provide fairly comprehensive health care coverage, there can be significant out-of-pocket expenses that you may have to deal with.

In that case, you should consider a Medicare Supplement plan (Medigap) to fill the coverage gaps that result from deductibles, coinsurance, and copays.

Medicare Supplement plans are often the best way to make your healthcare more affordable. When you get a Medigap plan, you’ll pay less out-of-pocket for healthcare services. It will work with Medicare Part A and Part B to reduce your out-of-pocket costs, and it’s not confusing at all.

Medicare Supplement plans are standardized, and there are ten to choose from. They all have different coverage, so it’s important to research the plans thoroughly before making a decision.

The standardized plans are available in all but three states and run from basic coverage up to comprehensive coverages that may leave you paying very little out-of-pocket expenses.

The current standardized plans to choose from are:

Since Medicare Supplement (Medigap) plans do not offer prescription drug or dental coverage, you should consider purchasing Medicare Part D for prescription drugs and a stand-alone dental plan to cover dental services.

If you are concerned about maximum out-of-pocket expenses, there are two Medicare Supplement plans that contain a maximum out-of-pocket expense limit and then begin covering 100% of the plan coverages for the remainder of the year.

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Medicare Supplement Out-of-Pocket Expense Limits 2022

Currently, there are two plans to choose from that contain an annual limit on out-of-pocket expenses. By selecting Plan K or Plan L, you can know the maximum amount of healthcare costs you will be responsible for and thus, plan ahead for your expenses.

Medigap Out-of-pocket expense limits

Frequently Asked Questions

Does traditional Medicare have an out-of-pocket limit?

There is no limit on out-of-pocket costs in Original Medicare (Part A and Part B). Medicare Supplement insurance or a Medicare Advantage plan can help reduce the burden of out-of-pocket costs for original Medicare.

What income is used to determine Medicare premiums?

Your Medicare Part B and Part D premiums can be affected by your income. The Income-Related Monthly Adjustment Amounts (IRMAA) is the function used to calculate your premiums for Part B and Part D if you earn more than $91,000.

Are you automatically enrolled in Medicare at age 65?

If you are receiving Social Security benefits. the SSA will automatically enroll you in Medicare Part A and Part B when you turn 65.

Is Medicare Part B automatically deducted from Social Security?

For most people, Medicare Part B premiums ($170.10 for 2022) are automatically deducted from the Social Security or Railroad Retirement benefits they receive.

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