Do You Have to Sign Up for Medicare?
Many people look forward to the day when they finally can sign up for Medicare but not everyone feels that way. This is an important question for anyone approaching 65 but it really breaks down into two smaller questions: Are you eligible for Medicare and, are you required to enroll in Medicare if you are?
Eligibility:
You are eligible for premium-free Part A (hospital coverage) and Part B (outpatient coverage usually with a premium attached) if you are age 65 or older and you or your spouse worked and paid Medicare taxes for at least 10 years. You can also get Medicare at 65 if you are receiving retirement benefits from Social Security or the Railroad Retirement Board, you are eligible to receive Social Security or Railroad benefits but you have not yet filed for them or you or your spouse had Medicare-covered government employment. If you are under age 65, you can get Medicare if you have been entitled to Social Security or Railroad Retirement Board disability benefits for 24 months or you are a kidney dialysis or kidney transplant patient. But if you’re turning 65 and you are eligible, Medicare often provides the least expensive and most comprehensive protection available.
Requirements:
You are not required by law to enroll in Medicare but if you do not enroll when you become eligible, without having other “creditable” insurance, you will likely be penalized for the delay when it comes times for you to eventually enroll in Medicare. Creditable coverage includes many retirement health and many employer group plans but COBRA and the ACA individual plans are not considered creditable by Medicare standards. The late enrollment penalty, (LEP) imposes a higher monthly premium for Part B benefits and/or Part D (Medicare prescription drug plan) benefits. The longer the delay in enrollment in Medicare without other creditable coverage, the higher the penalty will be and it never goes away. For that reason, it is very important to find out if the coverage you have now is considered “creditable”, by Medicare standards to help guide your decision. If you are receiving social security benefits when you turn 65, you will be enrolled in Medicare automatically and your Medicare card will be mailed to you around three months prior to the month of your 65th birthday.
Penalties:
Part B has a monthly premium which for most people in 2021, is $148.50 but it can be higher depending on income. The LEP for Part B is 10% of the standard premium for each 12-month period that you could have had Part B but didn’t and you’ll have to pay this penalty on top of your premiums for life or disenrollment. For example, if you delay enrolling in Part B for 2 full years you will have an additional 20% to pay on top of the $148.50, which equals $29.70.
For Part D, Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($33.06 in 2021) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $0.10 and added to your monthly Part D premium. In this case, the same 2 year delay would result in a an additional $8.00 per month above the premium you pay for your drug plan.
There is no penalty for not enrolling in a Medigap plan or a Medicare Advantage plan but not doing so when you are first eligible for Medicare could also have negative implications for you. For example, preexisting health conditions may be considered, or you might have to wait for the annual enrollment period to obtain coverage if you do not obtain coverage during your initial election period.
So, should you sign up? Well, if you don’t have a qualified employer group plan or you’re not covered under a spouse’s plan, then it makes a lot of sense to get on Medicare. Health insurance is a great idea at any age, but it is vital for seniors who may have fixed incomes and have ever increasing medical needs.
Bottom line?
Navigating your entry into Medicare can be tricky and confusing but making the wrong decisions could cost you money and limit your coverage at a time when you can least afford either. For a FREE one-on-one review from a Medicare expert call (732) 658-5100, email jamie@seniorstarig.com or go to our website at www.seniorstargroup.com.
