Alyssa Lane
If you are turning 65 and are concerned about your medical insurance coverage, there are a few things to consider. Firstly, it depends on the type of insurance you currently have and whether it is through your employer or your spouse's. If you are employed and have group health insurance, you may be able to keep your insurance and even delay signing up for Medicare Part B until you retire. However, it is important to check with your employer's benefits representative about their specific rules regarding coverage after turning 65. Additionally, if you are eligible for premium-free Medicare Part A, it is advisable to enroll as it can help reduce out-of-pocket expenses. For those with retiree coverage, it is crucial to understand how it works with Medicare Parts A and B to avoid losing benefits or facing late enrollment penalties.
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What You'll Learn
Medicare Part A is free for most at 65
Medicare Part A is free for most people at 65. This is sometimes referred to as "premium-free Part A". However, not everyone is eligible for free Medicare Part A at 65. If you do not meet the eligibility criteria, you will likely have to pay a monthly premium for Part A.
To be eligible for premium-free Part A, you must be entitled to receive Medicare based on your own earnings or those of a spouse, parent, or child. You must have worked for a certain amount of time, usually at least 10 years, and paid Medicare taxes. Alternatively, you may be eligible if you were a federal employee anytime after December 31, 1982, or a state or local employee anytime after March 31, 1986.
If you are already receiving monthly Social Security or Railroad Retirement Board (RRB) benefits at least four months before turning 65, you will be automatically enrolled in premium-free Part A when you turn 65. If you are not receiving these benefits, you must file an application for Medicare by contacting the Social Security Administration. Your coverage will begin the month you turn 65, provided you file the application within six months of turning 65.
If you have retiree coverage from a former employer, your Medicare coverage will pay for your healthcare bills first, and your retiree coverage will pay for any amount that Medicare does not cover. Therefore, it is advisable to enroll in premium-free Part A if you are eligible, as it can reduce your out-of-pocket expenses.
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Medicare Part B is paid for
If you are a federal employee or annuitant, you are entitled to Medicare Part A at age 65 without any cost. However, everyone is charged a premium for Medicare Part B coverage. The Social Security Administration can provide you with premium and benefit information.
Medicare Part B premiums are usually deducted automatically from your Social Security benefit payment (or Railroad Retirement Board benefit payment). If you don't receive Social Security benefits, you will be billed by Medicare. You can pay your premium directly from your savings or checking account through your bank's online bill payment service. All Medicare bills are due on the 25th of the month, and you will usually receive the bill earlier in the same month.
The amount you pay for Medicare Part B depends on your income. You will pay monthly Part B premiums equal to 35%, 50%, 65%, 80%, or 85% of the total cost, depending on what you report to the IRS. If you are a higher-income beneficiary, the amount will be deducted from your monthly Social Security payments. If the amount is greater than your monthly Social Security payment, or you don't receive these payments, you will be billed by another federal agency. This could be the Centers for Medicare and Medicaid Services or the Railroad Retirement Board.
If you have limited income and resources, you may be able to get help from your state to pay your premiums and other costs, like deductibles, coinsurance, and copays. You can contact your State Health Insurance Assistance Program (SHIP) for free advice about whether to buy a Medigap policy if you have retiree coverage.
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Medicare and retiree coverage can be used together
If you have both Medicare and retiree coverage, you can use them together. In this case, Medicare generally pays for your healthcare first, and then submits any amount it doesn't cover to your retiree plan. This is called "coordination of benefits".
Your retiree coverage might include extra benefits, like coverage for extra days in the hospital. However, it may also limit how much it will pay. For example, it might only start paying your out-of-pocket costs when they reach a maximum amount.
Before making any decisions, it is important to check with your retiree coverage to find out if you will lose any benefits for yourself, your spouse, or your dependents if you get Medicare drug coverage. You can do this by contacting your benefits administrator, who can provide you with a copy of your plan's benefit booklet. You may also want to contact your State Health Insurance Assistance Program (SHIP) for free advice about whether to buy a Medigap policy if you have retiree coverage.
If you have limited income and resources, you may qualify for Extra Help, even if you have creditable retiree drug coverage. If you qualify, your drug costs through Medicare may be lower than what you pay with your retiree coverage.
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Marketplace coverage must be cancelled when signing up for Medicare
When you become eligible for Medicare, you must notify your Marketplace plan that you now qualify for Medicare coverage. Your Marketplace coverage will not be automatically cancelled when you sign up for Medicare. However, if you receive premium tax credits to help pay for your Marketplace plan premium, your eligibility for these tax credits will end when your Medicare Part A coverage begins. People with Medicare are not eligible for these tax credits, and the premium tax credit can only be used for the purchase of Marketplace coverage, not Medicare. If you choose to enrol in Medicare Part A and keep your Marketplace coverage, you will have to pay the full price for your Marketplace plan, and Medicare will be the primary payer.
If you decide to drop your Marketplace coverage when you become eligible for Medicare, make sure your Medicare coverage has started before you cancel your Marketplace plan to avoid any gaps in coverage. You can start signing up for Medicare three months before your 65th birthday. Your first chance to sign up for Medicare (your "Initial Enrollment Period") is usually when you turn 65. It lasts for seven months, starting three months before you turn 65 and ending three months after you turn 65. If you miss your Initial Enrollment Period, you may have to wait to sign up.
To end your Marketplace coverage, you must update your Marketplace application. You can report a Medicare start date on your application up to three months before Medicare starts. After you submit your application update, confirm the plan for others in your household who need to keep their Marketplace coverage. For example, if your Medicare begins on May 1, you can update your Marketplace application as early as February 1. In your application, report that your Medicare starts on May 1. Your Marketplace coverage will then end on April 30 (the day before Medicare coverage starts). If you do not end your Marketplace coverage, you may have to pay back some or all of the premium tax credit you used when you file your federal taxes.
It is important to note that if you have to pay a premium for Medicare Part A, you can choose whether you want coverage through Medicare or the Marketplace. However, if you keep your Marketplace plan, you will pay the full price for it. Additionally, your insurance company might end your Marketplace coverage. It is against the law for someone who knows you have Medicare to sell you a Marketplace plan.
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Medicare Part B late enrollment may increase premium by 10%
In the United States, Medicare is a federal health insurance program for people aged 65 and over. It is also available for those with disabilities or end-stage renal disease. Medicare Part A covers hospital insurance, while Medicare Part B covers medical insurance.
Most federal employees and annuitants are entitled to Medicare Part A at age 65 without cost. However, everyone is charged a premium for Medicare Part B coverage. If you don't buy Medicare Part B when you first become eligible, you may face a late enrollment penalty, which may increase your premium by 10% for each full 12-month period you delayed signing up. This penalty amount is added to your monthly premium and must be paid for as long as you have Medicare Part B coverage.
For example, if you delayed enrolling in Medicare Part B for two years, your monthly premium would be 20% higher for as long as you have this coverage. It is important to note that you may be exempt from this penalty if you have job-based insurance or are eligible for a Medicare Savings Program (MSP). Additionally, if you have retiree coverage, it may limit your out-of-pocket costs, but it is essential to check with your benefits administrator to understand the specifics of your plan.
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Frequently asked questions
It depends on how you are receiving your current insurance. If you are receiving employer-sponsored health insurance through either your or your spouse’s job when you turn 65, you may be able to keep your insurance until you (or your spouse) retire(s). You will need to contact your employer’s benefits representative to find out whether they will continue your coverage when you turn 65.
Since Medicare Part A is premium-free for most beneficiaries, it makes good sense to obtain coverage. It can reduce your out-of-pocket expenses as well as costs to FEHB, which can help keep FEHB premiums down.
Your Marketplace coverage will not be automatically cancelled when you turn 65 and sign up for Medicare, but your eligibility for premium tax credits to help pay for your Marketplace plan premium will end when your Medicare Part A coverage begins. If you choose to enrol in Medicare Part A and keep your Marketplace coverage, you will have to pay the full price for your Marketplace plan.
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