Do I Have To Sign Up For Medicare When I Turn 65?

Note that you don’t necessarily need to sign up for Medicare when you turn 65. It just depends on how you are currently getting your health coverage and what health insurance options are available to you. That’s why the notice about getting penalized if you don’t sign up for Medicare may or may not necessarily apply to you.

Having spent almost 20 years as a Medicare broker advising people how best to get their health insurance coverage, I know there is a lot of confusion about the rules governing if you need to enroll into Medicare. This post explains what to do for several different situations.

To find the rules specific to your situation, scan each subheading below to find the situation that fits you. Each section gives you a quick overview of what to expect moving forward, whether on your own, or with a Medicare advisor—like our process at Keys to Medicare. There are also helpful tips and a couple additional follow-up questions at the end of this article, as well as our contact information, in case you would like to reach out to us directly. We are here to help, and there’s never any cost to consult with us!

You are currently on individual insurance

You need to transition onto Medicare at age 65. Medicare has stated that individual coverage does not count as creditable coverage past age 65. That means if you delay enrolling into Medicare, you will incur a late enrollment penalty.

Some individual health plans acknowledge this rule and help you by automatically terminating coverage at age 65 because they know you’ll need to transition onto Medicare. However, if you are on ACA, or Obamacare, it does not automatically terminate. In those situations, you need to call your current insurance carrier and request your coverage terminate the same day your Medicare starts. For more information, here is a link to the Marketplace webpage that describes transitioning onto Medicare. 

You are a federal employee

You need to transition onto Medicare. Please contact the federal employee benefits center in order to find out how to elect Medicare as your primary coverage. Your federal employee benefits will become your secondary coverage. Please note that there are different rates for non-Postal employees then for Postal employees. Currently, some public options are better priced than the non-postal options – it is a good idea to see a comparison of those options in order to determine which would be better for you.  Contact us to go through those options.  There is a great comprehensive website for federal employees linked here.

You have VA benefits

Most people with VA benefits are not required to also sign up for Medicare. You can just stick with having VA coverage. The VA website here can help explain how VA coordinates with other insurance. Of course, if you want an outside option to the VA, then you may also enroll into Medicare. However, there are several things to consider when trying to maximize your benefit from both programs.

First, it’s nice to know if you decide to sign up for Medicare at a later time you will not incur a late enrollment penalty for that time period between age 65 and when you enroll. This happens because the VA is considered creditable coverage, so you can actually skip enrolling at age 65 and still be penalty-free. That being said, Medicare does make you wait until the annual enrollment period between October 15 – December 7 to enroll. Then your coverage starts on the following January 1. 

Because Medicare severely limits the time when you can enroll into Medicare, we find most people with VA benefits want to have an outside health option that will cost them very little in terms of monthly premium so they can also have that coverage. Other individuals with VA prefer seeing outside doctors, so they try to optimize their Medicare coverage based upon how often they see doctors or use the services. It’s just a matter of finding the right balance for you and your lifestyle. 

You or your spouse are still working and have employer insurance

If you or your spouse have employee benefits, then you really have the best of both worlds. You can choose to either stay on your employer’s coverage or you can go onto Medicare—whichever is better for you.

We advise that you first check with your employer to make sure that it is considered creditable coverage with Medicare and that you are allowed to stay on past age 65. Once your employer confirms that, you can then determine whether your employer coverage is more economical for you or if Medicare would be the less expensive option. It is always important to compare the premium for either option, plus the additional costs that you will incur (e.g., drug co-pays, deductibles, etc.).

If you decide to stay on your employer plan, you do not need to notify Medicare of your choice. Medicare states that you only need to contact them about 2 to 3 months before your retirement in order to begin the transition from your employer health coverage to Medicare. At that point, there are currently 2 forms you would need to complete. These forms notify Medicare that you have had creditable coverage through your employer (or your spouse’s employer) and you need to start your Medicare coverage because your health insurance is going to terminate.

Oftentimes, people add Medicare Part A as secondary insurance to their group coverage if they decide to stay on their group plan. This makes sense if you work for a company that has more than 20 employees insured because Medicare would be your secondary coverage. Plus, since Part A is free, it could help with a hospital claim and possibly save you from having to pay a large deductible. You’ll just need to consider whether you’re doing this in addition to having an HSA or Health Savings Account. If you go onto either part of Medicare and continue to have a health savings account, you are no longer eligible to make contributions to that account. The tax savings from those contributions usually outweigh the potential benefits from having Medicare Part A as your secondary coverage, so you’ll want to run the numbers from all angles. Talking with a Medicare advisor can also help you make sure you’re getting the right deal.

Of course, if you do not have a Health Saving Account, you’ll still have the option to add on Part A. Yet we typically recommend that people do not additionally start their Medicare part B since there is a cost associated with this coverage. Additionally, it may limit your enrollment options when you go completely onto Medicare. Also, we strongly advise that if you work for a small employer (an employer with less than 20 employees) you contact us to discuss your situation in detail since there are several other factors to consider.

You don’t currently have any health insurance

If you’ve been living without health insurance, then you need to sign up for Medicare when you turn 65. Federal regulations state that individuals age 65 or older need to have some form of creditable health insurance coverage. If you do not and decide to go onto Medicare at a later time, then Medicare will penalize you for that period of time which you did not have creditable coverage.

Since Medicare strives to be an affordable health option for any individual over age 65 there is really no reason to go without health insurance past age 65. For those people who need financial support, there are several programs available to help pay for any premiums or co-pays that you experience. Also, there are several non-profit organizations that assist people in need, as well as programs run by hospitals, pharmaceutical companies and communities for individuals who qualify. Please don’t delay in getting the coverage you need!

Common Questions

What happens if I stay on group insurance and transition to Medicare when I retire?

About 2 to 3 months before you retire, you will need to notify Medicare that you want to begin your coverage. Medicare always begins on the 1st of the month, so you will need to coordinate which month you would like it to begin according to the termination of your employer health coverage. Typically, people are either adding Part B and Part D to their coverage, or they need to add parts A, B, and E to their coverage. There are 2 simple forms to complete and turn into the Social Security office to begin that transition.

For additional information that outlines the above topics please also see the webpage on the Medicare website linked here. And if you don’t know where to start, or you have questions about your existing coverage, please know that Keys to Medicare is here to help! Visit our contact page to learn more about how to get it touch. We would be happy to answer your questions so you can make a confident decision about your healthcare coverage.

Should I just sign up for Part A and Part B to make sure that I won’t be penalized?

Oftentimes, people will sign up for Part A but NOT Part B if they continue with their group insurance.  The criteria used to determine whether you should add on Part A are:

1. You are on a large group plan that is considered your primary insurance and then Medicare is your secondary insurance. A large group plan is defined as a group that insures more than 20 people.
2. You are NOT on a HSA. If you are on a Health Savings Account and elect either Part A or Part B of Medicare then you are no longer allowed to make contributions to your HSA. Oftentimes, people on HSA’s want to continue making contributions or perhaps their employer makes contributions, so they will not sign up for Medicare Part A.
3. Your group insurance should be “creditable coverage.” That term means that your group insurance has prescription coverage that meets Medicare’s minimum guidelines.  Satisfying that criteria means that you would not have a late enrollment penalty when you come off the group insurance and go onto Medicare. 

You should NOT sign up for Part B if you are going to continue on group insurance.  Part B has an expense with it every month that adds to the total cost of your insurance.  In addition, once you elect your Part B coverage you have a window of six months to sign up for either a Medicare Supplement without having to answer medical underwriting questions or three months to elect either a Medicare Advantage plan or a prescription Drug Plan.  After those windows expire you are only allowed to enroll during the annual enrollment period.  So, much better to wait to enroll into Part B once you come off your group insurance and go solely onto Medicare. 

What is the Medicare penalty for not enrolling?

If you do not have creditable coverage after the age of 65 there is a lifelong penalty for Medicare Part B and Medicare Part D. 

The Medicare Part B penalty is 10% of the monthly premium for Part B times the number of years that you went without coverage.  This penalty is added to your monthly premium every month for the rest of your life.

The Medicare Part D penalty is 1% of the national average premium per month times the number of months that you went without coverage.  This penalty is added to your monthly premium every month for the rest of your life.  

Do I need to notify Medicare if I am staying on group insurance?

No, you do not need to notify Medicare that you are going to stay on your group insurance and will not enroll right now.  When you decide to transition to Medicare there are two forms that you will need to complete. 

The first form confirms that you have had health insurance and that the prescription portion of that coverage was considered creditable coverage. 

The second form states that your group coverage is going to terminate and states the date it will terminate and so you are requesting that your Medicare begin.  Note that you can have your Medicare begin on the first of any Month so most people will have their group insurance carry them through the end of the prior month in order to not have any lapse in coverage.

TIPS:

1. Enrolling into either a Medicare Supplement and Prescription Drug Plan or a Medicare Advantage plan has the same premium whether you call the insurance carrier directly or go through an insurance broker. Since it costs you nothing extra – use an insurance broker that specializes in this area.  You can take advantage of their experience and expertise for free.
2. Have someone review your coverage annually. Prices change year to year and sometimes dramatically.  Take advantage of the free service some brokers offer.
3. If you have questions reach out and ask for help. It’s a big program that has a lot of rules and regulations that you may not be familiar with.  Make sure that you are going to make a mistake or get penalized because of a rule or regulation you were not familiar with—call an expert for help.