Your 65th birthday is around the corner, and you’ve decided you want to sign up for Medicare. If you have health insurance from either your or your spouse’s job, you might be wondering how you can enroll for Medicare, and how Medicare works with employer-sponsored coverage. Here are some important things to consider if you plan on keeping job-sponsored coverage.
Unless you’re automatically enrolled in Medicare as a result of either receiving Railroad Retirement Benefits or Social Security benefits for at least four months before your 65th birthday, then you’ll have to sign up for Medicare.
You can initially sign up for Medicare during the Initial Enrollment Period (IEP), which spans seven months total: three full months before your 65th birthday, the entire month in which you turn 65, and three full months after your birthday month. If you miss the IEP, you can sign up for Medicare at another time, though you might incur penalties. Additionally, you can sign up during the General Enrollment Period (GEP) and the Special Enrollment Period (SEP).
The GEP occurs every year from January 1st through March 31st, with coverage beginning on July 1st, though you might be penalized with enrollment fees. A SEP is an eight-month period where you can sign up for Medicare without penalty that starts after a person experiences a qualifying life event. One of these qualifying life events is the loss of current coverage. This means that if you lose your employer-sponsored coverage, you could sign up for Medicare without penalties. However, you would have to submit proof of coverage to avoid penalties.
There are several ways you can enroll in Medicare, including:
- Working with a Guided Medicare agent
- Applying online at ssa.gov
- Calling the Social Security number at 800-772-1213
- Visiting your local Social Security office. Click here for a locator tool
- Mailing a signed and dated letter to Social Security that includes your name, Social Security number, and the date you wish to be enrolled
There are different parts of Medicare that you can sign up for. They each cover different things and may or may not come with a monthly premium.
- Part A: Most people don’t have to pay a premium for Part A. This is a part of Original Medicare that helps cover inpatient hospital care, some health care, some skilled nursing facility expenses, and hospice.
- Part B: There’s usually a premium to pay for Part B. This is also a part of Original Medicare that covers medically necessary services for the prevention, diagnosis, and treatment of conditions.
- Part C: Part C is also known as Medicare Advantage, which are plans that private companies offer in contract with Medicare to provide Part A and Part B benefits. You have to enroll in Part A and Part B to get Part C.
- Part D: There’s usually a monthly premium for this type of plan. Part D provides prescription drug coverage from private companies. It’s only available if you’ve signed up for Part A and Part B.
Once you turn 65, check to see if you qualify for premium-free Part A coverage – most people do. If this is the case for you, sign up for at least Part A even if you plan to keep employer-sponsored coverage. However, since there are usually monthly premiums to pay for Part B and Part D, forgo signing up for these parts until you lose employer-sponsored coverage.
It’s also important to communicate with the employer providing the healthcare coverage that you’ve become eligible for Medicare and verify that the coverage meets the IRS’ definition of a group health plan. If the plan doesn’t meet this standard, then you’ll likely face a Part B late enrollment penalty. COBRA coverage doesn’t fit the IRS criteria for group health plans, so sign up for Medicare if you’re enrolled in COBRA when you turn 65 to avoid penalties.
Additionally, the size of the employer might also impact if you should sign up for Medicare when you first become eligible. If your employer has fewer than 20 employees, you might have to sign up for Medicare when you turn 65 to not have gaps in your insurance. Be sure to check in with your employer about this. If you have a Health Savings account, you and your employer need to stop contributing to it six months before you sign up for Part A to avoid a tax penalty.
If you’re able to have both Medicare and employer-sponsored coverage, then coordination of benefits rules decide who pays first and then second. The primary payer pays what it owes to your bills first, then the secondary payer takes care of the rest.
Here’s an overview of how Medicare would work alongside employer-sponsored coverage.
| Coverage through you or your spouse’s job: | How coverage works with Medicare Part A and Part B |
| Employer with less than 20 employees | Medicare pays for services first, job-based insurance pays second. If you don’t sign up for Part A and Part B, your job may not cover your costs Verify with the employer providing insurance where or not you’ll need to sign up for Part A and Part B when you turn 65 |
| Employer with more than 20 employees | Your job-based insurance pays first, Medicare pays second. You can wait to stop working or lose job-sponsored coverage to sign up for Part B without paying a late enrollment penalty |
If you’re confused about what the best course of action is for your circumstances, want to make sure you have the right coverage, or want to ensure you’re avoiding penalty fees, connect with us today to make an informed decision about your options.