I get many questions about whether there is a penalty if someone does not enroll in Medicare when they are first eligible at age 65.
Unfortunately, there is a tremendous amount of misinformation told to people approaching their Medicare age mainly by high-pressure Medicare sales people who either do not fully understand the complexities of Medicare or who simply will say whatever they think it takes to make a sale regardless of what is best for the person to whom they are supposedly helping.
As long as you have credible health insurance coverage through an employer – whether it is your employer or your spouse or legal partner – you can delay going on full Medicare until the time you leave the employer coverage without incurring any penalty now or in the future.
Here are some important things to know when you are about to turn 65 or are already 65 or older and have the option to stay on your employer coverage.
1) You may want to enroll in Medicare Part A only and not enroll in Medicare Part B. Medicare Part A covers you if you are an in-patient in the hospital or in a Skilled Nursing Facility for rehabilitation.
Unlike Medicare Part B, there is no monthly premium for Medicare Part A. If you go into the hospital or a Skilled Nursing Facility and still have employer coverage, there is a good chance Medicare Part A will pay for some costs for which you will otherwise be responsible.
An exception to this guidance is if you are currently contributing to a Health Savings Account (HSA). If you are contributing to an HSA you should not enroll in Medicare Part A only as you cannot contribute to an HSA once your Medicare Part A is effective.
2) Once you are 65, you have the choice of staying on your employer coverage or going on full Medicare. This is a decision you must make yourself. Your employer is prohibited by federal law from encouraging you to leave their coverage and go on full Medicare. However, it is often the right choice financially and healthwise for you to go on full Medicare.
3) If you choose to stay on your employer coverage past when you are eligible for Medicare, you can choose to change to full Medicare at any time. Your right to go on full Medicare at any time supersedes the election timetable your employer has for their coverage.
4) Once you decide to leave employer coverage and go on full Medicare, you will need to have your employer complete and sign form CMS-L564E – a form provided by Social Security in which your employer attests you have had credible health insurance with them and verifies when you are leaving that coverage.
You will then need to take this completed form CMS-L564E to your local Social Security office and they will enroll you in Medicare Part B (and Medicare Part A if you do not already have Medicare Part A) to coincide with when you leave your employer coverage.
5) When you first go on Medicare Part B, you will be able to enroll in any Medicare Supplement plan – including Plan G – offered in your area with no health questions because you will be in your 6-month Open Enrollment period that commences with your Medicare Part B effective date.
A Plan G Medicare Supplement, combined with Medicare Parts A and B, will allow you to go to any doctor or hospital anywhere in the country that accepts regular Medicare – as almost all do – and all of your costs will be covered 100 percent after you pay Medicare Part B’s once-a-year deductible of only $183.
You will also be able to enroll in a Medicare Part D drug plan without penalty because you will have a two-month Special Election Period due to losing the drug coverage with your employer plan.
I would appreciate the chance to help you with your Medicare transition when the time is right so you can choose the right Medicare plan for you both now and in the future.
I am also happy to help you evaluate whether your best option is to stay on employer coverage or go on full Medicare.
Simply click the following link to schedule a free, no-obligation 30-minute Medicare consultation.
I look forward to talking with you soon.