You do not have to sign up for Medicare at age 65. If you or your spouse continues with creditable health coverage, there is no penalty for delaying Medicare enrollment indefinitely.
Creditable coverage includes most employer group health coverage. The employer must have 20 or more employees for the group health plan coverage to be creditable.
Cobra coverage is not creditable insurance coverage.
You must continue to work for your employer for your health insurance to be creditable. Employer retiree coverage is not creditable.
You can enroll in Medicare Part A (inpatient coverage) without enrolling in Medicare Part B (outpatient care).
Should I enroll in Medicare at Age 65?
The short answer is, once you turn 65 you must either sign up for Medicare or have creditable health insurance coverage. If your spouse’s current employer offers creditable coverage, you may also participate in their plan instead of Medicare.
What is Creditable Coverage?
Creditable health insurance coverage is health insurance that Medicare deems to be roughly equivalent to Medicare coverage. In order for health insurance to be deemed creditable it must be provided by your employer or union. Your employer must have a minimum of 20 employees and you must remain actively working. if you work for a large company, your company plan is very likely creditable. If you work for a small company (under 20 employees) you healthy benefits are not likely creditable.
Annual Notice of Creditable Coverage
If your health insurance and/ or prescription drug coverage is creditable, your employer is required to send you a written notice of creditable coverage each year.
Will I Automatically Be Enrolled in Medicare?
Only those people who are already receiving Social Security or RRB income at least four months prior to turning 65 will be subject to automatic enrollment in Medicare.
Most people will need to actively enroll in Medicare. You can apply online for Medicare at SSA.gov or at a local Social Security office. Keep in mind, enrolling in Medicare has no impact on your Social Security benefits and is not influenced by your Social Security account.
Those under 65 who have been diagnosed with certain disabilities and have received Social Security Disability Insurance (SSDI) for 24 months or End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS) can also be automatically enrolled in Medicare.
What Is Medicare?
Medicare is a federal government health insurance program for US citizens and permanent residents who are age 65 or older, or under 65 and permanently disabled. When you sign up for Medicare coverage you will sign up for either Medicare Part A (inpatient coverage) and or Medicare Part B (outpatient coverage). Together Medicare Parts A & B are called Original Medicare and are represented on your red, white, and blue Medicare card.
Medicare Part A
Medicare Part A is sometimes called “Hospital Insurance.” It means that it helps cover inpatient hospital care, skilled nursing facility care, hospice care, and home health care.
Most people should absolutely sign up for Medicare Part A when they turn 65, even if they have health insurance from an employer. The reason is, most people had paid Medicare taxes while they worked. If you or your spouse paid Medicare payroll taxes for at least 40 quarters during your lifetime, your Medicare Part A is paid in full. Enrolling in Part A simply increases your insurance coverage.
However, sometimes it makes sense to delay Medicare Part A until a later date. For example, it’s useful for individuals who contribute to a Health Savings Account (HSA) or those who must pay a premium for Part A. You can use, but cannot contribute to an HSA account once your Medicare starts.
Medicare Part A: an easy choice
If you or your spouse has paid Medicare taxes (payroll taxes) for at least 10 years or 40 quarters, you will be automatically eligible for premium free Part A. Because it is already paid for, you may enroll in Part A at any time after age 65. If you enroll after your 65th birthday month, Part A will start retroactively either on your Initial Enrollment date or six-months prior to your application month, whichever is soonest.
Generally, you’re eligible for Part A if you:
Are 65 or older and you meet the citizenship and residency requirements.
Are under 65 but get disability benefits from Social Security or the Railroad Retirement Board (RRB) for at least 24 months.
Receive disability benefits because you have ALS (Amyotrophic Lateral Sclerosis, also called Lou Gehrig’s disease).
Have ESRD and meet certain requirements.
You can enroll in Medicare Part A without enrolling in Medicare Part B. Part A is considered a straightforward option if it is already paid for because it adds to your creditable coverage.
Medicare Part B
Medicare Part B is the second half of Original Medicare. Part B coverage provides insurance for outpatient and physician services. Unlike Part A, Part B requires a monthly premium.
The Part B monthly premium changes each calendar year. If your income is higher than average you may be required to pay more for your Part B. That increased premium is referred to as an Income Related Adjustment Amount (IRMAA). For details on IRMAA please see this article and video titled What is IRMAA?
Should I Sign Up for Part B (Medical Insurance)?
As we always say, it really depends on your individual circumstances, and we’re always here for you to answer any specific questions you may have. The best time to enroll is typically your initial enrollment period. This is because Medicare is often better insurance coverage at a lower cost than under 65 employer coverage. Plus, by enrolling during your IEP you guarantee missing out on the late enrollment penalty.
Late Enrollment Penalty
If you do not have access to creditable coverage as you turn 65 you most certainly should enroll in Part B because the penalty for not enrolling is severe. The late enrollment penalty is 10% of your Part B premium for every 12-months you skipped out on Part B coverage, applied for the rest of your life.
When Should I Enroll in Medicare?
There are only specific times of the year when you can enroll in Medicare, including your initial enrollment period (IEP), the General Enrollment Period (GEP), and a Special Enrollment Period (SEP). Make sure to learn the important differences between them to be on time to enroll.
Your Initial enrollment Period begins 3 months before your 65th birthday month, and ends 3 months after your birthday month. The one exception is when your birthday is on the first day of a month. We have a free Initial Enrollment Period Calculator for you to find your personal IEP.
The GEP runs from January 1st to March 31st each year. It is for those people who didn’t enroll in Part B during their IEP and did not have creditable coverage. When you enroll during this period, your Medicare will start the first day of the next month.
A Medicare Special Enrollment Period for Part B is triggered when you lose your creditable coverage. This could be by your intent, or through no fault or action of your own. After your IEP you can choose your Medicare coverage and SEP start date if you have creditable coverage. It can be the first day of any month you wish.
When you lose creditable employer coverage you have eight months after the end of creditable coverage to enroll in Medicare. This Special enrollment Period is for Part B. There is no need for Special enrollment Periods for Part A.