Ask Kip: Who can defer Medicare and what’s a qualifying plan
Q: I turn 65 in 2022. I am still employed, and both my wife and I are covered under my company’s plan. I do not collect Social Security and don’t plan to until I’m at least 67. As I understand it, if I’m employed and covered by a company health plan, I don’t have to file for Medicare when I’m 65. Should I file for Part A anyway? I would also like to continue contributing to a health savings account. Is there a form that I should fill out to let Medicare know? I’m just concerned, as the penalties for not filing are lifelong.
A: Medicare won’t penalize you if you have qualifying health coverage through a current employer or a working spouse. A qualifying plan is one with benefits that are at least as good as Medicare’s from an employer with 20 or more employees. Otherwise, you must sign up for Medicare, both Part A and Part B.
It’s just as well that you don’t want Social Security now because you can’t claim it and delay Medicare. Once you start collecting Social Security, enrollment in Medicare Part A is mandatory even if you have creditable health insurance through an employer, though you can delay Part B in that instance. Generally, it’s recommended that someone with qualifying health coverage sign up for at least Part A, which is free for most people. Part A covers in-patient care and can lower your medical costs if you’re hospitalized, paying secondary to a large employer’s plan.
In your case, however, because you want to continue contributing to a health savings account, you should not sign up for Part A, assuming you have a qualifying health plan through an employer. As long as you aren’t on any part of Medicare, you can continue funding an HSA after age 65, but be careful of Medicare’s six-month lookback policy. All contributions to the account should stop six months before you enroll in Medicare to avoid a tax penalty.
You don’t need to inform Medicare that you’re deferring. Just don’t sign up for Part A or B. The moment you stop working or lose employer health coverage, you have eight months to enroll. To avoid penalties, you will need to show your Notice of Creditable Coverage, which your employer should send you every year that you are covered by the health plan.