Ask The Medicare Specialist

QUESTION:

Question from Delia: My friend’s turning 65 this coming July. She intends to keep working and stay on her employer’s health plan. She’s not yet collecting Social Security and knows she needs to sign up for Part A within a certain window before July. When does she need to sign up for her Part B and a Supplement or Advantage plan? When she’s ready to retire? Also, is it a good idea to see how much Medicare will cost her versus what she pays for employer insurance and if Medicare is cheaper then sign up for Part B and Supplement or Advantage plan when she signs up for Part A? These sign-ups are confusing, and we want to ensure she’s not too late and ends up paying a big penalty for the rest of her life.

ANSWER:

When to enroll, how to enroll, and possible penalties for not enrolling, or enrolling late in Medicare A, B, and D are probably the most common question topics we receive. Although I do recommend signing up for Part A because it’s provided at no charge, it’s actually not required for those who get insurance supplied by an employer or a spouse’s employer, and there’s never a penalty for signing up late. Part A can possibly save those with a higher deductible or Maximum Out of Pocket (MOOP) thousands of dollars in the event of an inpatient hospitalization. The only group of people who should NOT enroll in Part A are those who have a HDQHP, a high deductible plan that is coupled with a Health Savings Account (HSA).

Your friend doesn’t need to sign up for Part B until either she retires or decides the employer plan isn’t as good of value as Medicare and a Supplement or Advantage Plan. She absolutely should have that analysis, which we provide at no cost. I estimate that three out of four people we have that discussion with are better off to stay with their employer plan. However, there are several factors to consider other than the cost of the employer coverage and deductible. Many people save a significant amount of money in both premiums and out of pocket medical bills by leaving their employer plan and going on Medicare. If that’s the case for her, she can sign up for both Parts A and B at the same time which usually is pretty easy to do on Social Security’s website, ssa.gov. Once her Medicare claim number has been issued, she can then enroll in a Supplement or Advantage Plan.

If your friend continues on the employer plan past her 65th birthday, there’s a form that needs to be filled out and signed by her employer and given to Social Security when she’s ready to retire or enroll in Medicare Part B. I recommend planning a retirement date about four months in advance and applying for Part B as close to 90 days prior to the first day of the month she wants B to go into effect. Let’s say that’s in July, she would want to apply on April 1st or as soon as possible thereafter. It takes 30 days for a Medicare card to arrive in the mail and applying early allows time to make corrections if there were errors in applying or processing. Any member of our staff can walk her through this task.

Let’s go over a few related items I think are important to mention. For those who have Part A only and need to apply for Part B after age 65, I highly recommend taking the enrollment form into your local Social Security office by hand. This makes the process quicker and eliminates the possibility that the application gets lost or misplaced. You don’t need an appointment, but I suggest arriving five or ten minutes before the doors open at 9am so you’re seen quickly.

Part B effective dates are always the 1st of a month, and for those turning 65, the first of the month of one’s birthday.

Those who have insurance with UPMC through an employer that has less than 20 employees on the policy CAN NOT opt out of Part B. UPMC will not cover outpatient claims for those who don’t have Part B in this case. Those on Highmark employer plans of any size or groups with over 20 insured employees can opt out of Part B. Those who are eligible for Medicare and get insurance as a retirement benefit should almost always take Part B, especially former teachers who were given it as an incentive to retire. This is a somewhat common mistake that can be extremely costly due to the Part B late enrollment penalty that does indeed last a lifetime. If you’re a retired federal employee, DO NOT opt out of Part B even if you’re told it’s an option. It’s an unwise decision in my opinion and one I believe may cause some serious hardship down the road for those who made that choice. People eligible for Medicare, even those who didn’t enroll, aren’t entitled to subsidies that help pay Affordable Care Act (Obamacare) plan premiums. Due to increased subsidies as part of The American Rescue Act, millions of people now have premiums well under $100, some as little as $0 for very good plans. However, when the IRS discovers you didn’t qualify for what can be as much as $600 or more per month in subsidies, you will be forced to pay it all back with interest and penalties.

If you’re already collecting Social Security, you don’t need to sign up for Medicare. Your card will automatically be mailed to you around 105 days prior to the first day of the month you turn 65. Those in this situation who will continue to get health coverage through their employer and want to opt out of Part B can do so by signing the back of their Medicare card and mailing it to Social Security. If you would like to make an appointment to go over your employer plan options vs Medicare, are turning 65 or retiring soon, or have any questions about today’s topic or any other, give us a call or email me personally at aaron@ getyourbestplan.com.