Employees who are close to age 65 and have health insurance through their work may want to consider how Medicare could take their health insurance into account.
While not everyone is required to enroll in Medicare at that age, many are required to enroll — or otherwise face lifetime penalties.
“The biggest mistake … is assuming you don’t need Medicare, and not signing up for it when you should have,” said Danielle Roberts, founder of insurance company Boomer Benefits.
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About 10 million workers are aged 65 and over, or 17.9% of that age group, according to the Bureau of Labor Statistics.
The general rule for Medicare registration is that unless you meet the exception, you will receive a seven-month enrollment window that begins three months before your 65th birthday and ends three months after that.
Approved insurance through your employer is one of these exceptions. Here’s what you know.
Initial or basic Medicare consists of Part A (hospital coverage) and Part B (outpatient coverage).
There are no fees in Part A as long as you have at least 10 years of work experience participating in the program through payroll (or self-employment) taxes. Part B has a standard monthly fee of $ 148.50 for 2021, although higher-income beneficiaries pay more with monthly adjustments (see chart below).
About 43% of individuals choose to receive their parts A and B through their benefits through the Advantage Plan (part C), which typically includes prescription drugs (part D) and may or may not have a fee.
The remaining beneficiaries will stick to the basic Medicare service and can combine it with the so-called Medigap policy and a separate Plan D. Note that higher-income beneficiaries also pay more for drug coverage (see chart below).
Remember that the consequences of late registration last a lifetime. In Part B, this surcharge is 10% for each 12-month period you could have received but have not registered. For Part D, the penalty is 1% of the basic premium ($ 33.06 in 2021) multiplied by the number of uninsured months when you did not have Part D or reliable insurance.
Working in a large company
The general rule for employees in companies with at least 20 employees is that you can defer joining Medicare until you lose your group insurance (i.e., you retire).
Many people with a large group of health insurance delay Part B, but sign up for Part A because it’s free.
“It doesn’t hurt you to get it,” Roberts said.
However, he said that if you have a health savings account linked to a highly deductible health plan through your employer, please note that you cannot make payments once you have registered for Medicare, even if only Part A.
If you continue with your current coverage and defer Medicare or parts of it, make sure the plan is considered acceptable collateral for both parts B and D.
If you are unsure whether you need to register, you may want to check with your human resources department or insurance company.
“I always think it’s good to just confirm,” said Elizabeth Gavino, founder and independent broker of Lewin & Gavino and principal of Medicare plans.
Some 65-year-olds with a younger spouse may also want to keep their group plans. Unlike your business option, spouses must be able to get Medicare themselves – either at age 65 or disabled if they are younger – regardless of whether you are eligible.
If the employer is small
If you have health insurance through a company with less than 20 employees, you must register for Medicare at age 65, regardless of whether you stay on the employer plan. If you decide to continue, Medicare is your primary insurance policy.
In this situation, however, it may be more cost-effective to waive employer coverage and acquire a Medigap and Part D plan — or alternatively a benefit plan — rather than consider the work plan as secondary insurance.
Often, employees in small firms pay more in bonuses than employees in larger firms.
According to the Kaiser Family Foundation, the average premium for individual insurance through employer-sponsored health insurance is $ 7,470. However, employees pay an average of $ 1,243 – or about 17% – to cover the rest of their business.
In small companies, the employee share can be much higher. For example, 28 percent are in plans that require them to pay more than half of their family insurance premiums, while 4 percent of employees covered by large corporations.