Is Medicare an option at 65?
Do you have to sign up for Medicare?
Turning 65 is a well celebrated birthday- especially if you have been buying your own health insurance. You are now eligible for Medicare!
You have a 7-month window to sign- up.
- 3 months before your birthday month
- Your birthday month
- 3 months after your birthday month.
If you are receiving social security benefits when you reach 65, you will automatically be enrolled in Medicare. Otherwise, you have to reach out to Medicare when you are ready to enroll.
Many are still employed when they reach 65 and are covered by an employer plan. Or they may be covered by a spouse’s plan. As long as you have credible insurance coverage, you do not have to sign up at 65.
You do need to check with your HR department. They may expect you to sign up for Medicare- at least Part A- hospital coverage- which is free. If HR is expecting you to sign up for Medicare, they are expecting Medicare to be the primary payer. In that case, if you don’t sign up for Medicare you may be responsible for medical expenses.
If you are on an employer health care plan, you can sign up for Part A only. Part A is hospital coverage. You can delay signing up for Part B, – outpatient services-, and Part D which covers prescription drugs.
However, if you have an employer provided, high deductible insurance plan with a Health Savings Account (HSA), don’t sign up for ANY part of Medicare. Once you begin Medicare you can no longer Fund an HSA. You may use your HSA to pay Medicare premiums and medical expenses. But you can no longer put new money into your HSA.
If you delay Part B and Part D past age 65, then you have new deadlines to worry about. Once you stop working and no longer have group health coverage, you have 8 months to enroll in Part B. Miss that deadline, for the rest of your life, you will pay a late enrollment penalty. The penalty is 10% of your premium for each 12-month period you don’t have coverage.
The window for Part D is shorter. You need to sign up within 2 months of losing drug coverage. You miss that window and it is 1% of your monthly base premium. The penalties can add up quickly. You may be farther ahead to have the cheapest drug plan then incur a lifetime of premium penalty.
Making the choices on Medicare insurance coverage can be confusing and time consuming. Once a decision is made, you are not likely to revisit the plan. However, you should periodically evaluate your plan. Especially your drug plans as the formularies can change.
Medical expenses are a large part of your retirement expenses. Take the time to plan and reduce your total costs.