Do I Have To Enroll in Medicare(And What’s With Those Penalties I Hear About)?

Most individuals turning 65 will have to enroll in Medicare while others may delay it  if certain conditions are met. Which one are you?

​Some individuals elect to continue to work and are covered by their employer or their spouses. The size of the company matters as it dictates whether the coverage is considered creditable, meaning the coverage is as good if not better than Medicare’s.

If you have coverage from an-
Employer- If your employer has over 20 employees then the coverage is considered “creditable” which means that is as good if not better than Medicare and you don't have to sign up. Most people sign up for Hospital Part A because for most people it is Free and Medicare will pick up what is not covered by the Employer plan. In this scenario the Employer coverage is the Primary Payer and Medicare is secondary. If you have an HSA then it is advisable to not sign up because then your contributions become taxable. If your employer has less than 20 employees then you will have to sign up and in this scenario Medicare will be the Primary payer and the Employer coverage is secondary. Even if you don’t have to sign up it is a good idea to ask your Medicare Advisor (me) to do a comparison between getting on Medicare and keeping your current coverage. Some company plans have steep deductibles and are expensive.
State Health Exchange - You will have to sign up for Medicare Parts A and B..
Union - It is advisable to connect with Human Resources because most unions require members to sign up for Medicare parts A and B when first eligible. Also, some Union retirement coverages come with premiums and deductibles so it is prudent to compare your coverage with a suitable Medicare Health Insurance plan. Care should be taken though because in most cases once the Union retirement coverage is forfeited you cannot re enroll in it.

Penalties-
Part A - If you are entitled to Free Medicare Part A (All of those that were employed for 10 years or more) then you don’t have to sign up if you have creditable coverage. Most people that continue to work and have employer provided insurance from a company that has over 20 employees sign up for Hospital Part A only and activate their Medical Part B later when they decide to retire. For those that have to pay for Part A, they will incur a penalty of 10% if they do not sign up when first eligible.
Part B - Some individuals elect to not enroll in Part B because of the premium and do not have creditable coverage. If they let their initial 7 month window lapse, then they will have to wait for the Part B enrollment period which runs from 1/1 to 3/31 for an effective date of 7/1. The penalty is an additional 10% for every year not enrolled.
Part D - Some individuals that do not take medications decide against signing up for a Part D Drug plan because of the premium and have no creditable coverage. Big no no. If they go 63 consecutive days without creditable Prescription Drug coverage then the penalty will be 1% of the national monthly average premium(About $30) times the number of months you were without it added to your Rx plan monthly premium.
In short, the individuals that get penalties have nothing and do nothing. Keep in mind that there are $0 Premium Medicare Advantage Plans in your area that include Part D Prescription Drug Coverage.

Your Enrollment period for Medicare begins 3 months before the month of your birthday and continues through your birthday month plus another 3 for a total of 7 months. If you are definitely going to sign up, do it during the first 3 months to ensure it begins on the first day of your birthday month(Which is the earliest it can start). The choice to sign up or not depends upon your current coverage. If you are collecting Social Security you will be automatically enrolled in both Medicare Part A and medicare Part B.