Although Americans who age into Medicare have the option to put off enrolling in Part B, individuals who do make that choice need to proceed with caution to avoid enrollment penalties that could continue indefinitely.
What is the Medicare Part B special enrollment period (SEP)?
The Medicare Part B SEP allows you to delay taking Part B if you have coverage through your own or a spouse’s current job, and then sign up for Part B — without a late enrollment penalty — as long as you do so within eight months of the active employment ending (or the employer-sponsored coverage ending, if that happens before the employment ends).
Coverage that isn’t through a current job – such as COBRA, severance benefits, retiree health benefits, or individual-market coverage – won’t allow you to qualify for this SEP. But the SEP lasts for eight months, so you may still qualify if your employment ended recently.
Do I qualify for the Medicare Part B special enrollment period?
You qualify for the Part B SEP if:
- you are eligible for Medicare because of your age or because you collect disability benefits. (People who have ESRD Medicare are excluded.);
- you had Medicare Part B or current employment-based health coverage in the month you qualified for Medicare; and
- less than eight months have elapsed since you didn’t have either current employment-based group health coverage or Medicare Part B.
To clarify, “current employment-based health coverage” means you (or your spouse) are an active employee and covered under the employer’s group health plan. If you’re retired and continuing to have coverage under the group plan via COBRA, retiree health benefits, or a severance package, this does not count as active employee coverage, since you’re no longer actively employed.
The eight-month window to enroll in Medicare Part B begins on the date you stop working, or the date your employer-sponsored coverage ends, whichever happens first. (If your coverage is from your spouse’s active employment, this would be measured based on the earlier of the day they stop working or the date the coverage ends.)
So if your group coverage ends while you’re still employed, your eight-month window to sign up for Medicare Part B would being when the coverage ends (this would be the case, for example, if your employer stops offering group coverage altogether, or switches from a group plan to an ICHRA, or you drop to part-time and no longer qualify for benefits). But if your group coverage continues while you’re working and potentially beyond that via retiree coverage, COBRA, or a severance package, your eight-month window begins when you stop working.
Some people may need to enroll in Medicare Part B even if they’re still working and covered by their employer’s health plan, if the employer has fewer than 20 employees. This is because small employer plans only pay after Medicare does (ie, they’re secondary and Medicare is primary). If you don’t enroll in Part B, your employer plan will pay less for your care – or nothing at all – when it finds out you’re Medicare-eligible.
If your employer has more than 20 employees, you don’t have to take Part B as long as you’re still working, but a small number of people do enroll to lower their out-of-pocket costs. (If you have Medicare because of a disability, you’ll need to enroll in Part B if your employer has fewer than 100 employees.)
To avoid a late enrollment penalty, you have to take Part B once your or your spouse’s employment ends. Medicare becomes your primary insurer once you stop working, even if you’re still covered by the employer-based plan or COBRA. If you don’t enroll in Part B, your insurer will “claw back” the amount it paid for your care when it finds out.
At that point, you would need to enroll in Part B, but might no longer qualify for the SEP if you delayed enrolling for more than 8 months. That would mean you’d have to wait until the Medicare General Enrollment Period (January 1 to March 31) to sign up for Part B, and you might be subject to a late enrollment penalty, depending on how long your enrollment was delayed.
(Enrolling in Medicare when you already have COBRA will cause the COBRA coverage to end. If this happens, your spouse and any dependents can continue coverage under the COBRA plan, even though you are no longer covered.)
How do I use the Part B SEP?
To use this SEP you should call the Social Security Administration at 1-800-772-1213 and request two forms: the Part B enrollment request form (CMS 40B) and the request for employment information form (CMS L564). You’ll complete the Medicare enrollment application and give the request for employment information form to the employer to fill out. You want to request additional copies of form L564 from Social Security if you’ve been covered through more than one job-based plan since you qualified for Medicare.
If an employer is unable to fill out the form, the Social Security Administration may accept the following items as evidence you had job-based coverage:
- Income tax forms showing you paid health insurance premiums;
- W-2s or pay stubs showing pre-tax medical insurance premiums withheld;
- health insurance cards with a policy effective date;
- explanations of benefits; or
- statements or receipts showing you paid health insurance premiums.
You should write down what you talk about with the Social Security Administration, and keep copies of the enrollment forms you submit in case you need to follow up. If your enrollment request is denied, you’ll have the chance to appeal.
People 65 and older only qualify for this SEP if they have coverage through their own or their spouse’s job, but disabled individuals can also qualify because they’re covered by a non-spouse family member’s plan (for example, a disabled child who is covered under a parent’s active employer-sponsored plan).
You can delay your Part B effective date up to three months if you enroll while you still have current employer-sponsored coverage or within one month after that coverage ends. Otherwise, your Part B coverage will begin the month after you enroll.
What if an employer gives me money to buy my own health plan?
A note about individual coverage: You’ll qualify for a SEP if you delayed Part B because you had current employer-sponsored coverage through a group health plan (GHP). This is a specific type of insurance plan sponsored or run by your employer. It includes group coverage your employer purchases from an insurer to cover all eligible employees, or a self-insured group health plan.
Instead of offering GHP coverage, some employers provide you with money to buy your own health insurance. They can reimburse you directly, in which case the money is taxed, or through a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) or an Individual Coverage Health Reimbursement Account (ICHRA). Coverage you buy on your own does not qualify you for the Part B SEP – even if an employer paid for some or all of it. And there is no coordination of benefits between Medicare and individual/family coverage (in other words, there is no “primary” and “secondary” coverage). If you have individual/family coverage, you should sign up for Medicare when you’re first eligible, during your initial enrollment period. If you miss that, you’ll need to wait until the general enrollment period, and you may be subject to a late enrollment penalty for Part B, depending on how long your enrollment is delayed.
Josh Schultz has a strong background in Medicare and the Affordable Care Act. He coordinated a Medicare ombudsman contract at the Medicare Rights Center in New York City, and represented clients in extensive Medicare claims and appeals. In addition to advocacy work, Josh worked on federal and state health insurance exchanges at the technology firm hCentive.
Contributions to healthinsurance.org and medicareresources.org represent only his own views.
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