By Julie Ward-Abdo
Senior Health Plan Finder
Turning 65 is a daunting reality that leaves one with many decisions to make.
One of the most confusing decisions can be regarding your current health insurance plan and Medicare. The standard age for Medicare eligibility is 65.
Most people think enrollment in Medicare is automatic, however, it’s not.
If you are collecting Social Security or Railroad Retirement Benefits you are eligible for automatic enrollment and you will receive your Medicare card in the mail approximately three months before your 65th birthday, along with a letter explaining how Medicare works. If you are turning 65 and not receiving these benefits you will need to determine whether signing up for Medicare now is the correct decision for you.
Many people think Medicare is free, but it is not. You and/or your spouse have had to work and pay into Medicare for 40 quarters or 10 years to be entitled to Medicare Part A without a premium.
However, there are costs associated with Part B Medicare. Medicare charges a monthly premium for Part B which is income related. High-income earners pay an additional amount above the base premium.
Many people today work beyond the age of 65 and have group health insurance through an employer or a union.
In this instance, there are certain rules that determine whether you need to sign up for Medicare.
If the company you work for employs more than 20 people, you can defer enrolling in Medicare because your employer group coverage is your primary insurance.
Signing up for Medicare Part B will add an additional monthly premium to your healthcare costs. Since Part A has no monthly premium many individuals sign up for Part A only.
If you work for a company with fewer than 20 employees, Medicare becomes your primary insurance and your employer plan is secondary. Without Part A and Part B Medicare, your employer coverage could be insufficient.
Check with your employer to see if you need to sign up for Medicare, so you make the right decision.
If your employer group plan is a high deductible plan with a Health Savings Account you can no longer contribute to the HSA if you enroll in Medicare Part A or Part B. You can use the money in your HSA for medical expenses until the money in the account runs out.
If you choose to delay enrolling in Medicare when turning 65 because you have coverage through your employer, you will have access to a Special Enrollment Period when you decide to retire.
The Special Enrollment period lasts for eight months after you leave your job or your group health coverage ends. You will not incur a penalty for delaying enrollment because you had creditable coverage.
Creditable coverage means that your employer or union coverage is as good as, if not better than the coverage you can obtain from a Medicare plan.
Once you make the decision to enroll in Medicare you can apply for Medicare Part A and/or
Part B through the Social Security Administration.
You can call up Social Security and make an appointment to go down to your local Social Security Office, or you can apply online at ssa.gov.
Either way, make sure you give yourself plenty of time in advance of your needs.
The general rule of thumb is to sign up 2-3 months before you want your Medicare to begin. Medicare always starts on the first day of the month.