Planning for Medicare
Almost all Americans should plan to be on Medicare at age 65 and today’s video, “Planning for Medicare”, addresses this important issue. The only group that will not face premium penalties associated with getting onto Medicare Part B after age 65 are those that have active group coverage through their work or a spouse’s work through an employer with 20 or more employees.
Most people who plan to transition to Medicare at age 65 do so through what’s referred to as their Initial Enrollment Period (IEP) which is three months before the month of your birthday, the month of your birthday and three months following the month of your birthday. We suggest beginning that process early because you can’t enroll in an Advantage Plan, Medicare supplement or Part D plan without a Medicare number which Social Security has to generate for you. Social Security processes Medicare Part A and B enrollments. Medicare does not. Please note that if you elect to receive Social Security benefits prior to your 65th birthday, you will automatically be enrolled in Medicare A and B and receive your Medicare card in the mail. There are also Americans who have Medicare prior to age 65 because of disability or serious illness.
If you have individual coverage for which you pay the full premium, nothing forces you to terminate that coverage when you turn 65, but you should still plan to transition to Medicare during your IEP to avoid Part B penalties and coverage gaps. If you have individual coverage which is subsidized through healthcare.gov or a state-based marketplace, you should also transition to Medicare at 65.
If you have coverage through a group of 20 or more employees and turn 65, you have the choice of staying on the group plan or going onto Medicare. If you choose to stay on the group plan, most should also consider enrolling in Medicare Part A so that you have a Medicare number in hand. Medicare Part A coverage would be secondary to the group coverage in this case. Those on a high-deductible health plan with a health savings account would likely decide to not enroll in Medicare Part A. IRS rules stipulate that someone who wants to make contributions to a health savings account or have an employer make contributions to a health savings account cannot be on Medicare Part A. If you enroll in Medicare Part A after age 65, know that Part A will be back-dated by six months, so plan to stop contributing to your health savings account six months before you go onto Medicare Part A if that is at all possible.
If you have coverage through a small employer of less than 20 employees, the requirements can vary by state. Sometimes, plan documents state clearly that one should be on Medicare Part A and B at 65, at which point the group plan becomes secondary; other states have legislation that employers can’t force workers to transition to Medicare at age 65. It is extremely important to understand this issue so you can plan ahead and make a sound decision.
Medicare has strict enrollment rules and moving parts which can surprise those who don’t take the time to understand when they should act. Remember that 65 is a big birthday, so plan accordingly.