Turning 65 - The Most Common Questions
Do I Have To Enroll In Medicare When I Turn 65?
Will I Be Penalized If I Don't?
The answer depends on what health insurance coverage you have currently.
If you have no health insurance, or one of the plans listed below, you should enroll in Medicare Part A & Part B leading up to your 65th birthday…
Individual Marketplace health plan through The Affordable Care Act (healthcare.gov)
Retiree health coverage through a former employer
COBRA continuation coverage through a former employer
Short-term health plan or health ministry plan
But if you have coverage through an employer health plan and that coverage is based on your ACTIVE employment or your spouse’s ACTIVE employment…you have the option to delay Medicare without penalty.
However, the size of the employer offering the health insurance impacts what you should do (see image and info below):
If the employer has 20+ employees…
PRIMARY Insurance: Employer health plan
SECONDARY Insurance: Medicare is Optional. It would be secondary insurance, if you enroll.
Part A - Do I have to at least enroll in Part A?
NO, you are NOT forced to enroll in Part A in this situation. You certainly can get Part A, but you can add it later when needed (e.g. when leaving the employer health plan). You will not be penalized (see Penalties bullet point below).
If you contribute to a Health Savings Account (HSA), then don’t enroll in any Medicare…not even Part A. Otherwise, you will no longer be able to contribute to your HSA. We will discuss Medicare’s impact on HSAs further down this page.
Penalties:
Part A - There is never a penalty for delaying Part A, if you have at least 40+ quarters (about 10yrs of work in your lifetime) paid into Medicare taxes. If you don’t have the quarters, you can avoid this penalty if your current spouse of at least 1 year has the 40+ quarters and they are at least age 62.
Part B - You will NOT be penalized for enrolling in Part B late, as long as you’re covered on an employer health plan (based on active employment) since turning 65. You can enroll in Part B literally any time while covered on the employer health plan based on active employment…OR…up to 8 months after separating service from that employer.
If the employer has less than 20 employees…
PRIMARY Insurance: Medicare
This means you need to enroll in Parts A & B.
However, if your employer is part of an association of other employers making it a large employer with 20+ employee, you would NOT have to enroll in Medicare. In that situation, confirm with your employer’s HR department if an association exception is involved.
SECONDARY Insurance: Employer health plan
If you don’t enroll in Parts A & B, your employer health plan may assume you have A & B…because the employer has fewer than 20 employees. This means the employer health plan may pay less on claims as the secondary plan.
When Can I Enroll?
How Do I Submit An Application?
If you’re receiving Social Security benefits at least 4 months prior to turning 65, you’ll automatically be enrolled in Medicare Parts A & B.
You DO NOT need to enroll online. Your Medicare card will arrive about 3 1/2 months prior to your birthday month.
You must keep Part A in this situation, but you can decline Part B (if appropriate).
Image Above: Initial Enrollment Period (IEP) for Medicare Parts A & B
If you’re NOT receiving Social Security benefits, you can proactively enroll in Medicare online at www.ssa.gov.
Your Initial Enrollment Period (IEP) to apply for Medicare Part A only, or both Parts A & B, spans 7-months (see image). 3 months before, the month of, and 3 months after your birthday month.
Social Security allows you to submit an enrollment application in the 3 months prior to your birthday month (SSA no longer allows an application 4 months prior, unless you’re also signing up for Social Security benefits).
Start dates are always the 1st of the month. See the image about when Part A & B start, depending on when you submit the application.
Note: If your birthday is on the 1st of the month, you’re eligible one-month sooner.
To submit an online application for Medicare…
You must have a My Social Security online account first.
You must have at least 40 quarters paid into Medicare taxes on your own work record.
Do I Have To Stop Contributing To My Health Savings Account (HSA)?
A Health Savings Account (HSA) is a great tool to save for future medical expenses on a tax-advantaged basis. And just because you’re turning 65, that doesn’t mean you have to stop contributing. You can contribute to your HSA beyond age 65, as long as you DO NOT enroll in any Medicare.
But once you enroll in Medicare Part A (or Social Security benefits, which automatically gives you Part A), you can no longer contribute to your HSA or receive funds from your employer in the account. Any “excess” contributions should not be deducted from your income on your federal tax return. An IRS penalty could also apply.
In the year your Part A begins, you can contribute on a pro-rata basis…based on the number of months you were NOT on Medicare. So if your Part A began April 1st, you weren’t on Medicare 3 months out of the year. You can contribute 3/12’s of the HSA max and 3/12’s of the $1,000 catch-up contribution.
Also, you DO NOT have to stop contributing to your HSA 6 months before you turn 65. As mentioned in the paragraph above, you only need to stop once your Medicare Part A begins (pro-rata contribution allowed that year). The reason why the “6-months” comment gets thrown around is because Part A is backdated UP TO 6 months when you enroll in Medicare and/or Social Security AFTER turning 65. But Medicare Part A will start no sooner than the 1st of your 65th birthday month.
There is a lot more to this topic, so check out our HSA page at www.medicaremindset.com/hsa
Should I Enroll in Medicare?
If you don’t have employer health insurance coverage through active employment, you need to enroll in Parts A & B when first eligible…and obtain supplemental medical and prescription drug coverage.
But if you are covered in an employer health plan, based on active employment, here are 7 considerations to help determine what you should do. Click the “+” button on each question below to expand and see more information.
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If you (or your spouse) plan to retire at age 65 and you’ll lose access to employer health insurance, then definitely enroll in Medicare Parts A & B when first eligible.
If you pan to keep working (or you will be covered by your spouse’s active employment), then look at the following items below…
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If you intend to keep working beyond age 65 and are covering a younger spouse or other dependents on your employer health plan, you will likely stay as-is and delay all or certain parts of Medicare initially.
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The monthly premium you pay for Medicare Part B is based on your Adjusted Gross Income from 2 tax years ago. See the most up-to-date premiums HERE.
If you’re still working and have income above the standard limits, your Medicare Part B premium will be higher (as well as Part D).
This will make Medicare more expensive at this time. But when you retire and your income drops, you can file an appeal to reduce your Medicare premium. See more detail on high income appeals at www.medicaremindset.com/irmaa
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As mentioned at the top of this page, the number of employees at your employer impacts whether you need to enroll in Medicare when turning 65.
If the employer has 20+ employees, Medicare enrollment is optional. If you do enroll in a part of Medicare, it would be secondary insurance coverage.
If the employer has under 20 employees, Medicare enrollment is required. Medicare is primary insurance coverage.
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If you are the employee and also own a Health Savings Account (HSA), you can keep contributing to the account beyond age 65…as long as you DO NOT enroll in any part of Medicare.
Please see more detail on Medicare’s impact on HSAs at www.medicaremindset.com/hsa -
In general, Medicare coverage is very good. But it needs to make financial sense to transition to Medicare.
If your employer plan has a pretty low deductible and max out-of-pocket limit…and the premium is relatively low…you may want to stay as-is and delay all or most of Medicare.
If your employer plan has a high deductible and max out-of-pocket…and/or the premium is higher than you would like…you may want to consider leaving the employer plan to go fully on Medicare with supplemental coverage.
And regardless of the monthly premium…if you regularly meet your plan’s deductible and max out-of-pocket limit, Medicare might make more sense.
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To avoid a Part D late enrollment penalty, you need to obtain Part D prescription drug coverage during your 7-month Initial Enrollment Period (IEP). However…
If you have CREDITABLE drug coverage through some other source, you can delay Part D drug coverage until you lose your existing drug coverage.
Confirm with your employer’s HR department if your health plan has creditable prescription drug coverage. They can provide you a letter annually that confirms this.
See more details on creditable drug coverage HERE.
Neither Medicare Mindset LLC nor its agents are connected with the Federal Medicare program.
