If you reach age 65 and you already have comprehensive health insurance, you don’t have to enroll in Medicare right away to get the benefits of major medical coverage. But in some cases, enrollment at age 65 is essential to avoid gaps in coverage.
Here’s some information to help you decide whether to delay Medicare enrollment when you already have coverage:
Signing up for Medicare at 65 is often a good idea
There are several good reasons to consider enrolling in Medicare when you turn 65 – even if you already have comprehensive coverage.
- Your Medicare coverage could have lower premiums, deductibles and out-of-pocket expenses compared to your existing plan.
- If your existing plan has a limited provider network, Original Medicare may offer you more flexibility because you can go to any doctor or hospital, nationwide, that accepts Medicare. Medicare Advantage plans set their own provider networks, so you’ll want to compare those with your existing plan’s provider network if you’re considering a Medicare Advantage plan .
- If you delay enrollment in Medicare and aren’t eligible for a special enrollment period, you could face lifetime penalties on Medicare premiums.
When might you consider delaying Medicare enrollment if you have employer-sponsored coverage?
If you’re happy with your coverage through employer-sponsored insurance (ESI), delaying enrollment in Medicare could save you money on Medicare Part B premiums.
Plus, if you’re making contributions to a Health Savings Account (HSA), enrolling in Medicare will mean that you’re no longer eligible to make those contributions, even if you continue to have coverage under an HSA-qualified health plan in addition to Medicare. That could mean losing an important tax savings.
(If you delay Medicare enrollment, keep your HSA-qualified health plan, and continue to contribute to your HSA, it’s important to understand that when you later enroll in Medicare, Your Part A enrollment will be backdated up to six months. So you’ll need to cease your HSA contributions to correspond with when that will be.)
The specifics of your employer-sponsored coverage may affect your decision to delay Medicare enrollment
It’s possible to have coverage under a group health plan and Medicare at the same time. But the number of employees the employer has will determine which coverage is primary and which is secondary.
Subject to certain limitations, you can delay your enrollment in Medicare Part B without a late-enrollment penalty while you’re covered under a group health plan as an active employee or the spouse of an active employee. But if the employer has fewer than 20 full- or part-time employees, your group plan will be secondary to Medicare. This means that your plan is allowed to have a provision that it will refuse to pay for your care if you don’t enroll in the primary coverage that Medicare would otherwise provide.
The result could be that your group plan becomes inadequate coverage on its own. You should discuss this with your employer before you become eligible for Medicare to understand exactly what you need to do in order to maintain adequate coverage.
If your group health plan is sponsored by an employer with 20 or more full- or part-time employees and you maintain coverage under your group plan and also enroll in Medicare, the group plan will be your primary payer and Medicare will be secondary. This is a scenario in which you may decide to delay enrollment in Part B.
You won’t have the secondary coverage that Part B would provide, but you also won’t have to pay the premiums for Part B while you continue to be covered under the employer-sponsored plan. You’ll be able to enroll in Part B without a penalty any time while you’re still working or within the first eight months after the active employee coverage ends.
Should you consider delaying Medicare enrollment if you have Marketplace coverage?
If you get your health coverage through the health insurance Marketplace, it is recommended that you sign up for Medicare once you turn 65 and notify your Marketplace plan that you qualify for Medicare coverage.
Your Marketplace plan won’t be canceled automatically when you turn 65 and enroll in Medicare. But you’ll lose eligibility for premium tax credits on that plan once your Medicare coverage begins, making premiums harder to manage for those relying on their premium tax credits.
If you have to pay a premium for Medicare Part A, you can keep your Marketplace coverage and continue to receive income-based premium subsidies (premium tax credits). But this does not apply to most people, as 99% of Medicare beneficiaries do not have to pay a premium for Part A.
Even if you do qualify to continue to receive a premium subsidy for Marketplace coverage, you would need to be aware of the Medicare late-enrollment penalty that would be applicable if you ever changed your mind and decided to enroll in Medicare. Unlike employer-sponsored group health insurance, maintaining coverage under an individual-market plan does not make a person eligible for a Medicare special enrollment period later on. And for people who have to pay a premium for Part A, the late-enrollment penalty would apply to Part A as well as Part B.
Maurie Backman has been writing professionally for well over a decade, and her coverage area runs the gamut from healthcare to personal finance to career advice. Much of her writing these days revolves around retirement and its various components and challenges, including healthcare, Medicare, Social Security, and money management.
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Tags: delayed enrollment, enrollment, penalties
