You might be wondering whether you need Medicare when turning 65 and still working. The answer isn’t as straightforward as you might think. Depending on your circumstances, you might be able to delay enrolling in some parts of Medicare. However, delaying signing up for other parts of Medicare as soon as you become eligible can cost you.
It’s important to understand Medicare’s enrollment deadlines, offerings, and considerations if you have health insurance to avoid paying costly penalties.
Medicare Enrollment Periods
You’re automatically enrolled in Medicare Part A and Part B if you’ve received Railroad Retirement Benefits or Social Security Benefits for at least four months before your 65th birthday. If this doesn’t apply to you, then you have can to sign up for Medicare during the following periods of time:
- Initial Enrollment Period (IEP): a seven month time period. Includes three full months before you turn 65, the entire month you turn 65, and three full months after your birthday month. If you miss the IEP, the GEP and SEP are other windows during which you can enroll.
- General Enrollment Period (GEP): The GEP runs every year from January 1st through March 31st. If you register during this time, your coverage begins on July 1st. Although you might be penalized with enrollment fees depending on which part of Medicare you sign up for.
- Special Enrollment Period (SEP): an eight-month period to sign up for Medicare coverage that starts the month after a qualifying life event. Some of these circumstances include moving, loss of current coverage, and contractual plan changes with Medicare. Special Enrollment Periods allow you to enroll for coverage without penalties.
If you want to learn more about these enrollment periods, click here.
The Medicare Alphabet
Familiarizing yourself with how Medicare works on its own will help you understand how it works with existing health coverage. Medicare has four main parts:
- Part A: helps cover inpatient hospital care, and qualifying health care, skilled nursing facility, and hospice expenses. Most people don’t have to pay a premium for Part A. People who don’t sign up during the IEP are subject to penalties.
- Part B: covers medically necessary services to prevent, diagnose, and treat conditions. There’s usually a premium to pay for Part B. You’ll likely have to pay penalty fees if you don’t sign up during the IEP.
- Part C: Part C is also known as Medicare Advantage. These are plans that private companies offer in contract with Medicare to provide Part A and Part B benefits. Some plans have additional benefits, such as vision, dental, and hearing. Most Part C plans also provide prescription drug coverage. You have to enroll in Part A and Part B to get Part C.
- Part D: Part D provides prescription drug coverage from private companies. It’s only available if you’ve signed up for Part A and Part B. There are usually penalties to pay if you don’t sign up during your IEP.
It’s important to familiarize yourself with the different penalties that you might have to pay for certain parts of Medicare. If you don’t sign up during the IEP and/or don’t experience a life event that allows you to enroll during a SEP, penalties may apply.
Do I Need Medicare When Turning 65 and Still Working?
Even if you have private insurance, it still might be worth signing up for Medicare to avoid paying penalty fees. However, suppose you want to continue to work with providers in your current plan’s network. It’s important to consider how different coverages work with Medicare to see if you can delay enrolling without penalty.
- Employer’s health plan: You’re exempt from enrollment penalties if you have health insurance through an employer or your spouse’s employer. However, since Part A is usually premium free, you may want to sign up when you first become eligible. If you miss your IEP, you may have to pay Part A premiums due to penalties. Suppose you don’t enroll in Part D because you have prescription coverage through your or your spouse’s employer; you have to ensure that it’s creditable prescription drug coverage by Medicare. Otherwise, you have to pay Part D penalties if you sign up for it after your IEP.
Should you lose employer sponsored health insurance, you’re eligible to enroll in Medicare without penalties during a SEP. It’s always a good idea to check with Medicare to see if you’ll have to pay any penalties based on the type of insurance an employer provides.
The size of an employer also comes into play. It’s a good idea to ask the employer if you’ll need to sign up for Part A and Part B when you turn 65. If the employer through which you get health insurance has less than 20 employees, you’ll likely have to sign up for Medicare. Medicare will pay for services first, and your job-based insurance will pay second. For employers with over 20 employees, then your job-based coverage will pay first, and Medicare second.
Some people may choose to delay signing up for Part A when they turn 65 even if they don’t have to pay premiums because they want to keep contributing to their health savings account, which you can’t contribute to once you’re enrolled in Medicare.
- Marketplace coverage: If you have Marketplace coverage, enroll in Medicare when you first become eligible to avoid late enrollment penalties. When you become eligible for Medicare coverage, you’ll no longer receive tax credits for Marketplace plans, which means that if you keep your Marketplace plan, you’ll have to pay the full price. Once you sign up for Medicare, notify your Marketplace plan that you now qualify for Medicare.
- COBRA: If your employer-sponsored coverage terminates, you might be eligible for COBRA coverage. Even if you do have COBRA, you would qualify for Medicare enrollment during a SEP. You should sign up for Medicare even if you have COBRA coverage to avoid late enrollment penalties.
If it seems complicated to make an informed decision on whether or not you should sign up for Medicare when you turn 65, even if you have health coverage, that’s because it is. Medicare is comprised of different components which are difficult to understand. Additionally, everyone’s circumstances are different. This is why you should connect with our team if you need help deciding what’s best for you based on your preferences and resources.