Last Updated: June 5,
2021 at 12:14 p.m. ETFirst Published: June 4, 2021 at 5:02 a.m. ET
By John Rossheim
It could save you
money over your employer’s health insurance—but there are caveats, exceptions
and potential pitfalls. Here’s some help
This article is reprinted by permission
from NerdWallet.
If you’re 65 or older, still working and are
covered by employer health insurance, it can make sense to sign up for Medicare
now. Enrollment might reduce your out-of-pocket costs.
Millions find themselves in this situation.
The proportion of Americans ages 65 to 74 who are working is projected to reach
30.2% in 2026, according to the Bureau of Labor Statistics.
But Medicare is complicated, and there are a
lot of caveats and some surprise expenses to be avoided. So for working people
65 or older, here’s help with figuring out when to enroll in Medicare and
how to avoid costly late-enrollment penalties and gaps in coverage.
A note for married couples where one spouse is
covered by the other’s employer insurance: The information provided here also
applies to you when you turn 65.
The cost equation: Will
Medicare save you money?
If your employer (or your spouse’s employer)
requires you to pay a large portion of the premium on your group health
insurance, you may find Medicare cheaper and the coverage adequate. So compare
your current coverage and out-of-pocket expenses — including premiums,
deductibles, copays and coinsurance — with your costs and benefits under
Medicare, which may also pay some expenses not covered by your group plan.
Medicare Part A: If it’s free,
why not take it?
If by the time you reach 65 you’ve worked a
total of approximately 10 years over your career, you’re entitled to
premium-free Medicare Part A,
which pays for inpatient hospital charges and more.
Why sign up for more hospital insurance when
an employer plan already provides good coverage at low cost to you? Because in
some cases, Medicare Part A may cover what your employer plan does not.
But as with so many aspects of Medicare, there
are caveats, exceptions and potential pitfalls.
If the employer has 20 or more
employees: If your or your
spouse’s employer has 20 or more employees and a group health plan, you don’t
have to sign up for Medicare at 65 if it doesn’t make financial sense.
(Although, a reminder: Part A is free for most people.)
If the employer has fewer than
20 employees: If your or your
spouse’s employer has fewer than 20 employees and the health coverage is
not part of a multiemployer group plan, at age 65 you must enroll in
Medicare Part A, which will be your primary insurance. “Primary” means that
Medicare pays first, and then the employer insurance kicks in to pay whatever
might be covered under that policy but was not covered by Part A.
If you have an HSA and want to
keep contributing: If
you’re saving to a Health Savings Account and wish to keep doing so,
you must delay enrollment in Medicare Part A (or Medicare Part B), because
Medicare enrollees can’t contribute to an HSA. In fact, to avoid a tax penalty,
you should plan to stop making HSA contributions at least six months before
signing up for Medicare.
Potential penalties: If you don’t enroll in Medicare Part A at age
65 and neglect to sign up within eight months of stopping work or losing
employer coverage (whichever comes first), you may have to pay a penalty. In
any case, you should sign up for Part A before your employer coverage ends to
avoid a gap in your health coverage.
Before delaying Part A: Before delaying Medicare, consult with
your or your spouse’s benefits administrator to be sure you understand how your
group plan will cover you without Part A when you reach age 65.
Medicare Part B: Delay to avoid
premiums
If you’re 65 or older and you or your spouse
still have employer health coverage, you will probably want to delay enrolling
in Medicare Part B,
which pays for doctor visits and many other outpatient services. Why? Because
unlike Medicare Part A, everyone pays a premium for Part B, so it’s never a
free add-on.
As with Part A, your particular circumstances
can influence your decision, and there are pitfalls to avoid:
If the employer has 20 or more
employees: If your or your
spouse’s employer has 20 or more employees and a group health plan, you’re not
required to sign up for Medicare at age 65. But the clock starts ticking once
you stop working or lose your employer coverage (see below), so don’t miss your
window.
If the employer has fewer than
20 employees: If your or your
spouse’s employer has fewer than 20 employees and the health coverage is not
part of a multiemployer group plan, at age 65 you must enroll in Medicare Part
B, which will be your primary insurance.
If you have an HSA and want to
keep contributing: If you have
an HSA and want to
continue making contributions to it, you must delay signing up for Medicare
Part B. Stop making contributions to your HSA at least six months before you
sign up for Part B. And you’ll want to sign up for Medicare at least a month
before you stop work or lose employer coverage.
Potential penalties: You must sign up for Medicare Part B
within eight months of stopping working or losing employer coverage. Failing
this, your premiums may include a penalty — for the rest of your life. In
addition, you may have to wait to enroll in Medicare, resulting in a risky gap
in health care coverage.
Before delaying Part B: Before you decide to postpone enrollment
for Medicare Part B, consult with your or your spouse’s benefits administrator
on how your group policy will cover you at age 65 and beyond.
Related: How to pay for healthcare costs
in retirement
Special situations: Previous
employers, military, vets
If you have health insurance from a previous
employer, such as your or your spouse’s COBRA or retiree health coverage, you
need to enroll in Medicare Parts A and B when you turn 65.
Also see: Expand Medicare benefits? What
public opinion says
If you have health benefits as a military
service member or veteran, such as TRICARE or CHAMPVA, you should consult with
those programs to determine when to enroll in Medicare.
It’s complicated, so get all the advice you
need.
Medicare processes and rules are complex and
rife with exceptions; if you overlook something in the enrollment rules, you
may pay a high price in terms of both penalties and gaps in coverage. So you
should consult with Medicare and with the benefits administrator for your
employer coverage — before you enroll or decide to delay enrollment.
John Rossheim writes for
NerdWallet. Email: USexpansion@nerdwallet.com.
No comments:
Post a Comment