65 and working?  Here’s everything you need to know about enrolling in Medicare
65 and working?  Here’s everything you need to know about enrolling in Medicare

If you’re nearing retirement age, you may have questions about enrolling in Medicare. Medicare is a health insurance program run by the US government for Americans age 65 and older, as well as some younger people with disabilities. The program provides health coverage to more than 65 million Americans at a cost of about $905 billion annually.

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Most Americans will enroll in a Medicare or Medicare Advantage plan when they turn 65, and some will pay a significant late enrollment penalty. But if you’re 65 or older and still working with employer-based health insurance, you may not be required to enroll.

Learn more about how Medicare works, what your options are, and what penalties you may incur for late enrollment after 65. For further reading, learn why the Inflation Reduction Act makes Medicare more powerful.

How does the Medicare program work?

The Original Medicare program consists of two main parts – Part A for hospital insurance and Part B for general medical insurance – along with additional private insurance for prescription drugs.

Part A. All Americans (and their spouses) who have had Medicare taxes withheld from their paychecks for 40 calendar quarters (10 years) get Part A coverage for free. If you’re not eligible for free Part A coverage, you can buy it for $278 a month in 2024 if you’ve paid Medicare taxes for more than 30 calendar quarters, or $505 a month if you haven’t.

Part A covers surgeries, hospital stays, skilled nursing and hospice care, inpatient rehabilitation, lab tests, and some home health care.

Part B. For Part B coverage, all Medicare participants must pay a monthly premium that starts at $174.70 in 2024 but increases with higher incomes. The costs are deducted from your Social Security payment or billed every three months. Part B is optional if you get Part A for free, but if you have to pay for Part A, you’ll need to enroll in Part B too.

Part B covers physician and medical services, outpatient treatment, medical equipment, preventive services and other medical and health services not covered by Part A.

Part C. Medicare Advantage plans (also known as Part C plans) are private insurance programs that must offer at least equivalent coverage to Original Medicare Part A and Part B, and often include Part D benefits as well (see below).

Part D. Medicare Part D is a private insurance supplement to Medicare that adds coverage for prescription drugs. You must be enrolled in both Part A and Part B to buy a Part D plan.

Medigap plans are supplemental private insurance plans that work with Original Medicare Part A and Part B to provide additional benefits or coverage.

How do I enroll in Medicare when I turn 65?

Enrollment in Medicare is managed by the Social Security Administration, and you can apply for Medicare during the initial seven-month period around your 65th birthday — the three months before your birthday, your birthday, and the three months after.

After the initial enrollment period, you can enroll in Part A during the General Enrollment Period — January 1 through March 31 — without penalty if you qualify for free coverage. If you have to pay a premium for Part A, you will pay a late enrollment penalty (see below).

If you don’t enroll in Part B during the initial period, you will have to wait until this General Enrollment Period from January to March and pay a penalty that will continue as long as you are enrolled in Part B Medicare Enrollment during the General Enrollment Period also means your coverage won’t start until July 1st.

Americans who begin receiving Social Security or Railroad Retirement Board benefits at least four months before turning 65 will automatically be enrolled in both Medicare Part A and Part B on the first day of the month in which they turn 65 65. If you want to delay Part B, you’ll need to contact Social Security before your coverage starts.

If I’m 65 or older and get health insurance from work, do I have to enroll in Medicare?

No. If you are still working, your company employs more than 20 people, and you have employment-based health insurance, you do not need to enroll in Medicare until your existing health insurance expires. When you stop working or your employer ends your group insurance plan, you have eight months to sign up for Medicare, whether you have COBRA or another health insurance plan.

If you enroll in Medicare and also have work-based insurance, your work-based insurance will pay first and Medicare will pay second.

If you work for a company that employs fewer than 20 people, you will need to contact your company’s human resources department about the specifics of your health insurance program. You may be able to delay enrolling in Medicare, but some employers require people 65 and older to enroll in Medicare to receive company health insurance benefits.

For those smaller companies with fewer employees, Medicare pays first and workplace insurance pays second.

If you turn 65 and don’t have work-based health insurance, you’ll have to enroll in Medicare within the seven-month initial enrollment period or pay a penalty that will increase your premium.

Answering a few quick questions on the official Medicare website will help you determine if and when you should enroll in Medicare. For even more detail, a comprehensive fact sheet from the Centers for Medicare and Medicaid Services outlines many possible scenarios for those deciding whether or not to enroll in Medicare at age 65.

If you want to completely quit Medicare Part A, you can, but you’ll have to give up your Social Security benefits entirely and pay back any benefits you’ve already received.

What are the penalties for late enrollment in Medicare?

Medicare late enrollment penalties are shown as increased monthly Medicare premiums. If you’re eligible for free Medicare Part A, there’s no late enrollment penalty, although you’ll have to wait until the January to March general enrollment period to join.

If you have to pay for Part A and join after your initial enrollment period, you will pay 10% more for your monthly premium for twice as many years as you delayed enrollment. For example, if you enroll in Medicare four years late, you’ll pay the extra 10% each month for Part A for eight years.

Enrolling in Medicare Part B late can cost you more and the penalty stays much longer. If you decide to enroll in Part B late, you can only do so during the general enrollment period and you will pay an additional 10% per month for each year you delay enrollment. The penalty for late enrollment in Part B is constant — you will continue to pay the additional premium each month while receiving Medicare benefits.

For Part D, you can delay enrollment if you have existing prescription drug coverage, but penalties begin to accrue after 63 days without coverage. You will pay 1% more monthly premiums for each month you delay enrollment in part D.

After you join a Medicare plan, you will receive a notice explaining any possible penalties. If you do not agree with any penalties, you may file an appeal within 60 days of the date of the notice.

Can I change my Medicare plan after I enroll?

yes During the Medicare Open Enrollment Period (OEP), also called the Annual Election Period (AEP), you can change a Medicare Part A and B plan to a Part C plan or vice versa. You can also switch Part C plans. Finally, you can join, drop out, or switch to a Part D prescription drug plan. The open enrollment period occurs each year between October 15 and December 7, and your updated coverage begins January 1.

You can also make changes during special enrollment periods (SPEs), which occur after certain life events, such as if you move or lose other coverage. You have the option to switch to another plan if your current plan changes its contract with Medicare. You can enroll in a new plan within 60 days of the life event.

For more health-related money tips, learn how to get free COVID-19 testing.

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