You can delay enrollment, but there are IFs and BUTs
If you’re over 65 and still working, you’re not alone. Warren Buffet is still at it and he just turned 87! In August of this year, the Bureau of Labor Statistics said there are 9,205,000 U.S. senior citizens in the same boat.
Retirement used to be the pot of gold at the end of the rainbow. You worked all your life, paying into a pension, paying into Social Security, or contributing to a 401(k). Somewhere along the line, that pot disappeared.
Now, many people cannot afford to retire. Pensions have dried up. Social Security is no longer enough to live on. 401(k)s have been raided to pay for college tuition, medical expenses, or household repairs.
If you are still working when you turn 65 and have other insurance coverage, you still need to pay attention to signing up for Medicare. There are IFs and BUTs to consider. We have them for you.
First, a recap of the highlights of last week’s blog topic – if you are turning 65 and NOT working – and how they relate to you if you are working and are covered by other insurance. If you’re working and NOT covered by other insurance, definitely sign up for Medicare. (Of course, this assumes you have paid the required amount of payroll taxes during your employment years to be eligible.)
Initial Enrollment Period
(1) There is an IEP (Initial Enrollment Period) of seven months. This starts three months before your 65th birthday and runs through your birth month and another three months. This is the same even IF you are still working. If you stop working or your other coverage ends before the end of the IEP, you MUST sign up before your IEP runs out.
Penalties Could Result If You Miss IEP
(2) If you miss signing up within your IEP, you may suffer penalties – i.e., paying a higher rate. This is the same IF you are still working.
Already Getting Social Security?
(3) If you are already receiving Social Security payments – and you can under some employment situations – the SSA automatically will sign you up for Parts A and B. IF you are employed, you may want to delay B. You CANNOT delay A.
Here is one scenario: Fred will be 65 in November. He is covered by group insurance from his employer. His IEP started in August and will end in February of next year. He expects to be employed for two more years. He is not yet receiving Social Security payments.
He should sign up for Medicare Part A anyway. There is no charge. He can opt-out of A but, since there is no charge, why bother?
He can opt-out of Medicare Part B. BUT, when his employment or other insurance coverage ends, he immediately enters a SEP (Special Enrollment Period) and he must apply for Part B within eight months. To repeat, IF employment or insurance coverage ends before the end of his IEP, he must sign up before the IEP ends.
Scenario two: Alice is working part-time and is covered by her husband Fred’s group insurance. She turns 65 in December. She is getting Social Security payments. She can NOT opt out of Part A. She can delay Part B but decides that the coverage under Medicare will be better than that from Fred’s group insurance. She also signs up for drug coverage under Part D.
Ifs and BUTs
IF you are working and are covered by other insurance, you can opt-out of Parts A and B. We recommend that you sign up for Part A anyway since there is no fee. Be sure to sign up for Part B within the no-penalty period discussed above.
IF you (1) have other insurance you pay for, (2) are covered by COBRA, or (3) you are covered by retiree health benefits from your former employer (or your spouse’s), you SHOULD sign up for A and B. You CANNOT delay and sign up later.
BUT if you are paying into an HSA (Health Savings Account) you must stop if you enroll in Medicare. You can draw on funds already there without having to pay in any new funds. If you choose to continue to pay into your HSA, do NOT enroll in Medicare.
Next: What if you’re in prison, in a nontraditional marriage, living abroad, and turning 65? What then?
Also, we discuss the consequences of not enrolling within the prescribed enrollment periods.