By Rusty Gloor, National Social Security Advisor at the AMAC Foundation, the non-profit division of the Association of Mature American Citizens
Dear Rusty: There is confusion between my husband and me about when to seek Medicare. My husband will be 64 by July. Although he plans to continue working until age 67 and continue with his employer’s insurance plan, I think there is a requirement that he apply for a certain portion of the Medicare pension plan at age 65, otherwise there is a show punishment at some point in the future after retirement. There is a lot of confusion with this and I hope you can explain exactly what the process is when applying for Medicare at the age of 65 and after reaching full retirement age. Also comment on whether it is an option to continue with employer insurance, or whether you should apply for Medicare at the age of 65. Signed: Confused about Medicare
Dear confused: There are two main parts of Medicare to be aware of in this discussion – Part A, which is coverage for hospitalization services, and Part B, which is coverage for outpatient services (doctors, medical tests, etc.).
Medicare Part A: Provided your husband is eligible for Social Security when he or she turns 65 (he or she does not have to collect it, only eligible for it), there will be no premium associated with Medicare Part A (hence no penalty, if he delays claims it). If his employer coverage is “credible” (which is a group plan with at least 20 participants), then he may defer enrollment to Part A until 1) his employer’s hospitalization coverage ceases, or 2) he begins to collect his social benefits (enrollment). in Part A is mandatory for those who charge social security after the age of 65). He may also want to check with his employer’s HR department to see if his employer plan requires him to enroll in Part A when he turns 65. But if your husband enrolls in Part A and has a health savings account (HSA) through his employer, any contribution made to his HSA account after the month before he is 65 will be subject to an IRS fine and become taxable income.
Medicare Part B: There is a monthly premium associated with Part B, but if your husband has a “creditworthy” health coverage from his employer when he turns 65, he can simply defer enrollment to Part B until his employer coverage ends and there will be not be any Too late registration Penalty for waiting. When his employer coverage ends, he will enter an 8 month Medicare Special Enrollment Period (SEP) where he can sign up for Part B without penalty. However, if he does not enroll during (or before) his SEP and enrolls in Part B later, he will be subject to a late enrollment penalty, which would increase his Part B premium by 10% for each full year he goes without. ” creditworthy “” coverage after 65 years. FYI, your husband can also sign up for Part B shortly before his employer coverage ends, stating that he wants his Medicare coverage to start on the 1st of the month following the end of his employer coverage (to avoid any gap in coverage) . When your husband signs up for Part B, he must also sign up for Part A (at no extra cost). FYI, Part B premiums may increase annually – the standard premium for Part B for 2022 is $ 170.10 / month.
There’s another Medicare item called “Part D,” which is coverage for prescription drugs. Expenses for prescription drugs are not covered by Medicare Parts A / B, and such coverage must be acquired separately if desired. When your husband’s prescription drug coverage from his employer plan expires, he must separately (through a private insurance company) acquire drug coverage during his SEP, or there will be a separate Part D late registration penalty to acquire drug coverage thereafter.
The bottom line is this: If your husband’s health coverage from his employer is “creditworthy”, he can simply defer enrollment with Medicare until his employer coverage expires and there will be no penalty for late enrollment for doing so (unless he waits for its SEP to enroll).
This article is for informational purposes only and does not represent legal or financial guidance. It presents statements and interpretations from AMAC Foundation staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To ask a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at [email protected].