Medicare has important deadlines that you need to be aware of during your initial enrollment period. Missing those deadlines could mean gaps in coverage, penalties, and limited options when it comes to selecting a Medicare Supplemental Plan.
Many people are aware of the age 65 start date for Medicare, however, it’s not uncommon for individuals to work past age 65 and have health insurance coverage through their employer or through their spouse’s employer. For many of these individuals working past age 65, they are often surprised to find out that even though they are still covered by an employer sponsored health plan, depending on the size of the employer, and the insurance carrier, they may still be required to enroll in Medicare at age 65.
In this article we will cover:
- Enrollment deadlines for Medicare
- When to start the enrollment process
- Effective dates of coverage
- Special rules for individuals working past age 65
- Medicare vs. employer health coverage
Initial Enrollment Period
For many individuals, when they turn age 65, they are required to enroll in Medicare Part A and Part B which becomes their primary health insurance provider. The Medicare initial enrollment period lasts for seven months. This period begins 3 months prior to the month of your 65th birthday and ends 3 months after that month.
Example: If you turn age 65 on June 10th, your initial enrollment period begins on March 1 and ends on September 30.
Retired and Collecting Social Security
If you are retired and you are already receiving Social Security benefits prior to your 65th birthday, no action is needed to enroll in Medicare Part A & B. Your Medicare card should arrive in the mail one or two months prior to your 65th birthday.
However, even though you are automatically enrolled in Medicare Part A and Part B, if you are not covered by a retiree health plan through your former employer, you should begin the process of enrolling in either a Medicare Supplemental Plan or Medicare Advantage Plan at least two months prior to your 65th birthday. Medicare Part A and Part B by itself, does not cover all of your health costs which is why most retirees obtain a Supplemental Plan. If you wait until your 65th birthday, the effective date of that Supplemental coverage may not begin until the following month which creates a gap in coverage.
As soon as you receive your Medicare card, you can enroll in a Medicare Supplemental Plan or Medicare Advantage Plan to ensure that both your Medicare coverage and Supplemental Coverage will begin as soon as your employer health coverage ends.
Retired But Not Collecting Social Security Yet
If you are retired, about to turn age 65, but you have not turned on your Social Security benefits yet, action is required. Medicare is not going to proactively notify you that you need to enroll in Medicare Part A & B. The responsibility of enrolling at the right time within your initial enrollment period falls 100% on you.
Three months prior to your 65th birthday you can either enroll in Medicare online or schedule an appointment to enroll in Medicare at your local Social Security office.
Note: If you plan to enroll in Medicare via an in-person meeting at the Social Security office, it is strongly recommended that you call your local Social Security office two months prior to the beginning of your initial enrollment period because they may require you to make an appointment.
If you decide to enroll online, it’s a fairly easy process, and it should only take you 10 to 15 minutes. Here is the link to enroll online: https://www.ssa.gov/benefits/medicare/
If you are simultaneously applying for Medicare and Social Security to begin at age 65, there is a separate link where you can enroll in both online: https://www.ssa.gov/retire
Working Past Age 65
If you or your spouse plan to work past age 65 and will be covered by an employer sponsored health plan, you may or may not need to enroll in Medicare at age 65. Unfortunately, many people assume that because they are covered by a company health plan, they don’t have to do anything with Medicare until they officially retire. That assumption can lead to problems for many people when they go to enroll in Medicare after age 65.
The following factors need to be taken into consideration if you have employer sponsored health coverage past age 65:
- How many employees work for the company
- The insurance company providing the health benefit
- Does the plan qualify as “credible coverage” in the eyes of Medicare
- The terms of your company’s plan
At Age 64: TAKE ACTION
I’m going to review each of the variables listed above but before I do, I want to make a blanket recommendation. If you plan to work past age 65 and will be covered by your employer’s health insurance plan, right after your 64th birthday, go talk to the person at your company that handles the health insurance benefit and ask them how the company’s health plan coordinates with Medicare. Do not wait until a week before you turn 65 to ask questions. If you or your spouse are required to enroll in Medicare, the process takes time.
19 or Fewer Employees
Medicare has a general rule of thumb that if a company has 19 or fewer employees, at age 65, employees have to enroll in Medicare Part A and B. Medicare becomes your primary insurance coverage and the employer’s health plan becomes your secondary insurance coverage. Your open enrollment period is the same as if you were turning age 65 with no employer health coverage.
20 or More Employees
If your company has 20 or more employees and the health insurance plan is considered “credible coverage” in the eyes on Medicare, there may be no action needed at age 65. As mentioned above, you should go to your human resource representative at your company, after your 64th birthday, to verify that the health plan that they have is considered “credible coverage” for Medicare. If it is, then there is no need to sign up for Medicare at age 65, your employer health coverage will continue to serve as your primary coverage until you retire.
However, if your company’s health plan does not qualify as “creditable coverage” then you will have to enroll in Medicare Part A & B at age 65 to avoid having to pay a penalty and avoid gaps in coverage once you officially retire.
Action: 90 Days Before You Retire
If you work past age 65 and have credible employer health coverage, 90 days before you plan to retire, you will need to take action regarding your Medicare benefits. This will ensure that your Medicare Part A & B coverage as well as your Medicare Supplemental coverage will begin immediately after your employer health insurance coverage ends.
When you retire after age 65, Medicare provides you with a “Special Enrollment Period”. You have 8 months to enroll in Medicare Part A & B without a late penalty:
63 Day Enrollment Window: Medicare Supplemental, Advantage, & Part D Plans
Even though the Special Enrollment Period lasts for 8 months, you only have 63 days after your employer coverage ends to enroll in a Medicare Supplemental, Medicare Advantage Plan (Part C), or a Medicare Part D Prescription Drug Plan. But remember, you are not eligible to enroll in those plans until after you have already enrolled in Medicare Part A & B which is why you need to start the process 90 days in advance of your actual retirement date to make sure you meet the deadlines.
COBRA Coverage Does Not Count
Some individuals voluntarily elect COBRA coverage after they retire to extend the employer based health coverage. But be aware, COBRA coverage does not count as credible insurance coverage in the eyes of Medicare regardless of the plan that you are covered by. If you do not enroll in Medicare within the eight months after leaving employment, you may face gaps in coverage and permanent Medicare penalties once your COBRA coverage ends.
Spousal Coverage After Age 65
You have to be very careful if you plan to be covered by your spouse’s employer sponsored health insurance past age 65. Some plans with 20 or more employees will serve as primary insurance provider for the employee but not their spouse. In these plans, the non-working spouse is required to enroll in Medicare at age 65.
We have even seen plans where the health insurance for the non-working spouse ends on the first day of the calendar year that they are scheduled to turn age 65. This creates a whole other issue because there is a gap in coverage between January 1st and when the non-working spouse turns age 65. Again, as soon as you or your spouse turn age 64, you should start asking questions about your health coverage.
The Insurance Company Matters
There are a few insurance companies that voluntarily deviate from the 19 or less employees rule listed above. These insurance companies serve as the primary insurance coverage for employee that work past age 65 regardless of the size of the company. Medicare does not fight it because the government is more than happy to allow an insurance company to foot the bill for your health coverage. In these cases, even if your company employs less than 20 employees, you do not have to take any action with regard to Medicare at age 65.
You Cannot Enroll Online
If you work past age 65 and have employer based health coverage, you do not have the option to enroll in Medicare online. You have to prove to Medicare that you have maintained credible health insurance coverage through your employer since age 65, otherwise you face penalties and potential gaps in coverage. You will need to make an appointment at your local Social Security office to enroll. Your employer or the health insurance company will provide you with a letter which serves as your proof of insurance coverage.
Enrolling in Medicare Supplemental or Medicare Advantage Plans
Once enrolled in Medicare Part A and part B, individuals that do not have retiree health benefits, will enroll in either a Medicare Advantage Plan or Medicare Supplemental Plan. You have to be enrolled in Medicare Part A & B, before you can enroll in a Supplemental or Advantage Plan.
It’s extremely important to understand the differences between a Medicare Supplemental Plan and Medicare Advantage Plan which is why we dedicated an entire article to this topic:
Retiree Health Benefits Through Your Former Employer
For employees that have retiree health coverage, you still need to enroll in Medicare Part A & B which serves as the primary insurance coverage and the retiree health coverage serves as your secondary insurance coverage.
Some larger employers even give employees access to multiple retiree health plans. You have to do your homework because some of those plans are structured as Supplemental Plans while others are structured as Advantage Plans.
Medicare vs Employer Health Coverage
Once you turn age 65, if you plan to continue to work, and have access to an employer based health plan, you still need to evaluate your options. A lot of companies have high deductible plans where the employee is required to pay a lot of money out of pocket before the insurance coverage begins. In general, Medicare Part A & B, paired with a Supplemental Plan, can offer very comprehensive coverage at a reasonable cost to individuals 65 and old. You have to compare how much you are paying in your employer health plan and the benefits, versus if you decided to voluntarily enroll in Medicare and obtain a Supplemental policy.
The results vary on a case by case basis and each person’s health needs are different but it’s worth running a comparison. In some cases, it can save both the employer and the employee money while providing the employee with a higher level of health insurance coverage.
Contact Us For Help
If you have any questions about anything Medicare related, please feel free to contact us at 518-477-6686. We are independent Medicare brokers and we can make the Medicare enrollment process easy, help you select the right Medicare Supplemental or Advantage Plan, and provide you with ongoing support with your Medicare benefits in retirement.
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Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.