5 Things to know about Medicare at age 65

For people who are nearing age 65, Medicare is often the first thing you hear about and the last thing you want to think about. Chances are you’ve heard all sorts of different information from friends, family, TV and mailings. One person says you need to do this, but another says you need to do that. The absurd amount of marketing materials and mailings you’ll receive will make you want to invest in an industrial paper shredder. Everything seems so complicated which makes it hard to figure out what you actually need to do. Read on to learn about the 5 things you need to know about Medicare when turning 65.

1) You Might Not Need to Sign Up

This is the most common question we get on a daily basis here at Doctor’s Choice.

“I’m turning 65, do I have to sign up for Medicare?”

The short answer is; no, but it depends on your situation.

If you or a spouse are going to continue working past 65, be actively employed and covered under Employer Group Coverage, then you do not need to sign up for Medicare. Most people in this situation will sign up for Part A when they turn 65 and wait until retirement to sign up for Part B and any supplemental insurance. You don’t even have to sign up for Part A at 65, but most people do because there is no monthly cost (as long as you, or a spouse in some cases, have paid 40 quarters into Medicare taxes).

“But a friend told me if I don’t sign up I’ll get a penalty?!”

While it’s true Medicare will penalize you in certain situations, you will not receive a penalty for switching from group coverage to Medicare after age 65. The rules regarding Medicare penalties could be a blog post all its own, so for simplicity’s sake we’ll explain it like this: Medicare penalizes you based on the amount of time you were uninsured for medical and prescriptions. So, if you’ve had continuous creditable coverage through an employer, you’ll avoid these penalties.

For more information on Medicare penalties visit here:https://bit.ly/2Rkpyr2 and here: https://bit.ly/2Yejd4r

Some situations may require you to sign up for Medicare parts A + B right when you turn 65. Some common scenarios for this would be:

Self-employed, you have health insurance through an individual marketplace ie: Obamacare. Typically, once you turn 65 these plans will automatically boot you off, thus making Medicare the only viable health insurance option.

Employer has less than 20 employees. If you or your spouse’s employer has less than 20 employees, then you will need to sign up for Medicare when you turn 65. This has to do with the coordination of benefits between the group plan and Medicare. In short; Medicare would become primary over the group plan in this situation, so if you don’t have Medicare, it’s as if you don’t have any insurance.

Retiring when you turn 65. If you’re retiring at age 65 then you would most likely want to sign up for Medicare so you have health insurance and avoid any penalties.

You’re Collecting Social Security. If you’re collecting Social Security before 65 you are automatically enrolled in Medicare 3 months before you turn 65.

2) Your Timeline to Enroll in Medicare

When enrolling in Medicare at age 65, you have a 7-month window to sign up. Three months before, the month of, and the 3 months after your 65th birthday. This time frame is known as your Initial Enrollment Period (IEP). We’re going to use an example with a birthdate of May 17th. Using this example, you would be eligible to enroll in Medicare between February-August. Depending on which month you sign up, your Medicare will start at different times. It’s important to note that Medicare always starts on the first of the month.

If you sign up during the 3-month period before your 65th birthday, you’re Medicare will start on the first of the month in your birth month. For example, if your birthday is May 17th, you could sign up between February-April and your Medicare would become active for May 1st.

If you sign up during your birth month, your Medicare will start on the first of the following month. Using the same example above, if your Birthday is May 17th, and you sign up for Medicare in May, it would become active on June 1st.

If you sign up the month after your 65th birthday, your Medicare won’t become active for an additional 2 months. If your birthday is on May 17th and you sign up for Medicare in June, it won’t be active until August.

If you sign up 2 or 3 months after your 65th birthday your Medicare wouldn’t become active for an additional 3 months. For example, your birthday is May 17th, you sign up for Medicare in July, Medicare won’t start until October 1st. If you were to sign up in August, it wouldn’t be active until November 1st.

If you miss the IEP window to sign up you must wait for the General Enrollment Period or a Special Election Period, i.e.: losing employer coverage. The General Enrollment Period runs from Jan 1st to March 31st. If you sign up during this time, your Medicare will start on July 1st.

It’s important to be aware of these rules so you can time your Medicare start date at the time when you’ll need it and avoid lapses in coverage.

3) Medicare might be cheaper

If you’re spending somewhere near $300-$400 / month, individually for your group plan, there are options through Medicare Advantage and Medigap plans that could save you some money. We can use this (general) cost breakdown as a guide.

Medicare Advantage Costs:

Medicare Part B =$135.50/month (2019)

Medicare Advantage Plan =$0 — $100/month + out of pocket costs

Total cost/month = $135.50 to $250+

Medicare Supplement Costs:

Medicare Part B =$135.50/month (2019)

Medicare Supplement Plan = $140 — $200+/month

Part D drug plan=$15 — $50+/month + copays

Total cost/month = $350 — $400+

This is a very general cost breakdown and we would recommend meeting with us or a licensed broker in your area if you are considering this change for monetary reasons. In most cases employer group coverage will be more cost effective than Medicare due to employers chipping in for some or all the premium cost. Plus, Medicare only covers individuals so if you have dependents, switching to Medicare might not make sense. If you’re single, healthy or paying a lot for group coverage then there are options with Medicare that could save you money, and it’s always good to know your options.

4) If you are signing up for Medicare, stop contributing to your HSA

HSA’s (Health Savings Accounts) are becoming more and more common for people on employer group coverage. Without going into too much detail, these are savings accounts tied to High Deductible Health Plans that you can contribute funds to on a pre-tax basis. You can then take distributions from that account on a tax-free basis, to pay for qualified medical expenses. These tax benefits change when you enroll in Medicare so it’s important to be aware of the rules.

In order to contribute to an HSA you have to be what’s referred to as an “eligible individual.” You can read all you need to know about eligibility and HSA’s at this link: https://www.irs.gov/publications/p969

Once you sign up for Medicare, you become ineligible to contribute to your HSA. If you delay enrollment in Medicare at 65 to continue contributing your HSA, make sure to stop contributing 6 months before you do enroll. This is because Medicare will look back 6 months from your Medicare Part A start date and tax you on any contributions made during that time.

Ineligibility only means you can’t contribute to your account on a tax-free basis anymore. Your funds already in the account stay with you for life, until they are used up. These funds can still be distributed on a tax-free basis, but only to pay for qualified medical expenses. Some examples of what your HSA could pay for are Part A, Part B or Part D premiums along with qualified out of pocket expenses i.e: deductibles, copays and co-insurances.

5) Don’t Stress

One of the best pieces of advice we can give is to not let this process stress you out. Healthcare is certainly a necessity at age 65, but losing sleep over it isn’t going to help anything. It may seem like a lot to sort through but with enough lead time, the right guidance and helpful information the process becomes much less daunting. Age 65 comes with its perks too, *cough *cough — senior discounts.

We try to provide helpful, educational materials to make this process easier. Check out our YouTube , Facebook and our other Medium posts for more information on all things Medicare. If there’s something we missed or something you wanted more information on please leave a comment or send us a message and we will get back to you as fast as possible. Thank you for reading!

About Doctor’s Choice:

Doctor’s Choice is the premier service advocate for Medicare, making healthcare transitions easy for employers and their employees. Founded by a Brown University-trained Physician, they deliver best-in-class service to seniors before, during and after their transition to Medicare. Offering coverage across the country and tech-enabled personalized guidance through their Turbo Medicare Roadmap, Doctor’s Choice provides concierge-level service and healthcare advocacy to our members for life. For more insights on retirement trends and employer strategies for an aging workforce, follow Doctor’s Choice on LinkedIn @DoctorsChoice, Twitter @DoctorsChoiceU, and Facebook @DoctorsChoiceUSA.