Here's what you need to know about signing up for Medicare when
you're already covered by a health plan.
Maurie
Backman (TMFBookNerd) Feb 10, 2020 at 9:32AM Author Bio
Medicare eligibility begins at age 65,
and you can first enroll up to three months prior to the month of your 65th
birthday. But many seniors find that they're still working at 65, and as such,
already have health coverage at that time. If that's the case, you don't need
to sign up for Medicare right away -- but it could pay to do so.
How Medicare works
with other insurance
You are allowed to have
Medicare in conjunction with another health insurance plan. In fact, in some
cases, it could be beneficial. If you're 65 and have health insurance through
an employer, you can sign up for Medicare Parts A and B at that time, or just
Part A.:
Part A is what pays for hospital care, and it's
generally free for enrollees -- meaning, you don't pay a premium for it. Part B
covers outpatient services and diagnostics, and there is a premium attached to
it. Currently, that premium costs $144.60 as a baseline, but it can cost more
if you're a higher earner.
You'll often hear that if you don't sign up for
Medicare on time (meaning, in close proximity to your 65th birthday), you'll
risk lifelong surcharges on your Part B premiums. But that only holds true if
you don't have access to a group health at age 65 through an employer with 20
or more employees. If you have that group health plan, you'll get a special
enrollment period to sign up for Medicare once you leave your employer or your
group health coverage ends -- whichever comes first.
Now, let's assume you have a decent group health
plan at work, and your employer has that 20-person minimum. In that case, what
you may want to do is sign up for Medicare Part A at 65, since it's free. That
way, it can serve as your secondary insurance in the event you wind up needing
hospital care and your primary insurance (your group health plan through work)
doesn't pick up the entire tab. You can even choose to take Part B while having
a health plan already, and it can serve as secondary insurance for you as well
-- but you'll need to pay for it.
Does it pay to have
Medicare plus another health plan?
If your group health plan through work isn't all
that comprehensive, then it could pay to get coverage under Medicare simultaneously
-- or at least sign up for Part A, since it doesn't cost you anything. The only
drawback to going this route is if you're participating in a health savings account (HSA), you can no
longer make contributions once you're enrolled in Medicare. HSAs offer a host
of tax benefits (similar to those you'd find in popular retirement savings plans like 401(k) and
IRAs), so that may be a perk you're hesitant to give up -- especially if your
employer makes HSA contributions on your behalf, effectively giving you free
money to pay your healthcare costs.
When it comes to signing up for Medicare while
already having health insurance, there's really no right or wrong answer. But
you should know that doing so is an option, and one that could benefit you.
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