Should I Enroll in Medicare If I’m Still Working?

In 2009, the average Medicare household spent $4600 on health related costs. This is equal to about $400 per month and roughly 15% of total household spending. These costs include insurance premiums, medical services, prescription drug costs and medical supplies. Medicare enrollment periods have changed to allow the insurance companies and CMS to get insurance cards out to those insured no later than January 1st when coverage begins. Open enrollment runs from October 15th to December 7th for both drug and health plan benefits. Disenrollment from Medicare Advantage Plans runs from January 1st to February 14th.

Also, if you sign up during the three months prior to your 65th birthday, coverage will begin on the 1st day of your birthday month. Furthermore, you can sign up within three months after your 65th birthday, although coverage will then be delayed by one to three months.

Many people keep working well beyond age 65, the age when most people become eligible for Medicare. If your employer offers health coverage, do you need to enroll in Medicare? What if the employer offers or does not offer prescription drug benefits?

Most workers probably should enroll in Medicare Part A, which is free for most people and covers institutional care in hospitals and skilled nursing facilities, as well as certain care given by home health agencies and care provided in hospices. But ask your employer (or your spouse’s employer, if that’s where you get your coverage) whether your current coverage will change in any way if you enroll in Medicare, even just Part A. For more information on Part A, click here.

Medicare Part B has a monthly premium, which changes each year (it is $104.90 a month in 2013). Medicare Part B covers outpatient and preventative care like office visits and tests. Individuals who don’t sign up for Part B when they first become eligible can pay a 10 percent premium penalty for each year that enrollment is delayed. However, there is an exception for employees who are currently employed and covered by their employer’s group health plan. In most cases, as long as you have group health insurance through your employer, you can delay signing up for Part B without a penalty. When you retire, you will have a special enrollment period of eight months to sign up for Part B.

Whether you should enroll in Part B while you are still working depends on whether your employer has more than 20 employees. If your employer has more than 20 employees, you do not need to sign up for Part B right away because your employer’s group health plan will be the primary insurer. If your employer has fewer than 20 employees, however, you should enroll in Medicare when you are first eligible. Medicare is the primary insurer, which means it pays before your employer’s insurance pays. If you don’t enroll, your employer’s plan can refuse to cover you for services that Medicare would have covered. That means that you may have to pay for those services out of your own pocket. For more information on Medicare Part B, click here.

Medicare Part D covers prescription drugs. Even if you choose not to enroll in Medicare Part B, you can still enroll in Part D and doing so may be advisable to avoid a late-enrollment penalty similar to the one for Part B. If you already have prescription drug coverage through your company, your insurance plan should send you a letter that will state whether or not the company’s coverage is “creditable” — meaning it is equal to or better than what Medicare is offering. If it is “creditable,” then you won’t have to pay a late-enrollment penalty if you decide to switch to Medicare Part D later.

Also, if you are already covered by your company’s drug plan, a Medicare plan may not be right for you. Don’t sign up until you compare your current plan with the Medicare plans available to you. Finally, before you sign up for a drug plan, ask your employer if you can drop your drug coverage without losing your other supplemental insurance. Once that insurance is gone, you may not be able to get it back.

If you are currently receiving Social Security benefits, you don’t need to do anything to enroll in Medicare. You will be automatically enrolled in Medicare Parts A and B effective the month you turn 65. If you do not receive Social Security benefits, then you will need to sign up for Medicare by calling the Social Security Administration at 800-772-1213 or online at http://www.socialsecurity.gov/medicareonly/. If you decide not to enroll in Part B, fill in the box on the back of your Medicare card declining Part B coverage and mail it back to the address listed. You will be mailed a new card.

If you have any questions or feel you need help navigating through enrollment or your eligibility requirements for Medicare or Medicaid please call us at 630-377-3241.