When do I need to sign up for Medicare if I’m still working?

TRUE OR FALSE: “I don’t need to think about Medicare until I’m 65 or retired since that’s when I become eligible.”

FALSE. Please tell us you answered FALSE.

Medicare is a federal health care program that is regulated by CMS (Centers for Medicare & Medicaid Services) and with that, comes a lot of important guidelines to follow. And breaking these rules can result in much more than a slap on the wrist. We’re talking financial penalties that can stick with you indefinitely. Forever. Or worse, make you ineligible for coverage.

Medicare is typically available to people at age 65 or retired, but is also offered to those under 65 if disabled or suffering from End-Stage Renal Disease/permanent kidney failure.

Here are a few scenarios that could get you a not-so-nice penalty:

  • Your group employer does not provide sufficiently credible coverage OR you enroll in Medicare but don’t think you need Part D because you aren’t currently taking any medications.
    • Result: Part D penalty that gets tacked on to your premium when you do obtain the correct coverage & will stay on forever. As of now, this is 1% of the base beneficiary premium for every month after age 65 that you didn’t have it.
    • How to avoid: Enroll in even a low premium Part D plan, regardless if you need it at the moment or not.
  • Your employer has fewer than 20 employees & you didn’t sign up for Part B since you’re still working.
    • Result: You could have major coverage gaps you aren’t even aware of.
    • How to avoid: Enroll in Parts A&B at age 65 if still working with 20 or fewer colleagues.
  • You’re still working & contributing to your HSA account.
    • Result: You are at risk for being assessed a tax penalty.
    • How to avoid: Stop contributing to your HSA 6 months prior to Medicare eligibility. You can still use the funds in that account for deductibles, copays or coinsurance but you cannot add any more money to it.
  • You elected COBRA coverage at the time of retirement but didn’t enroll in Part B.
    • Result: COBRA is now secondary to Part B so you must enroll in Part B in order to not have a coverage gap.
    • How to avoid: If you already have Medicare, you can get COBRA…. But if you become Medicare eligible while on COBRA, you cannot keep it.  Most importantly, losing COBRA does NOT qualify as a Special Enrollment to get Part B.

So much of this is situational and really depends on your personal circumstance. We are happy to discuss this individually and help determine exactly what you need to do and when.

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