While Medicare eligibility begins at age 65, some people, under certain circumstances, may choose to delay enrollment in certain aspects of Medicare.
Individuals become eligible for Medicare at age 65. Medicare Part A covers inpatient hospital care, skilled nursing care, and hospice care. Individuals are eligible for premium-free Part A coverage if they, or their spouse, have paid Medicare taxes for 10 years, or 40 quarters.
Medicare Part B covers outpatient care, doctors visits, and preventative care. Premiums vary depending on an individual and their spouse’s annual income.
Medicare Part C, or Medicare Advantage, plans are optional, private plans that fill in the gaps of Part A and Part B coverage. Many plans also include Part D prescription drug coverage. Premiums are usually relatively low, but may include additional costs and restrictions, such as copays, deductibles, coinsurance, and/or requirements to use in-network doctors and health care facilities.
Medicare Part D is also optional and covers prescription drugs at an average premium of $33.50 in 2018.
When Enrollment Can Be Delayed
Almost everyone who is eligible for Medicare Part A should enroll in Medicare Part A. Even if a person has other health care coverage, Part A is free. The only downside to enrolling in Part A when you have other eligible health insurance is that individuals can no longer contribute to a health savings account.
The question of whether or not to enroll in Medicare Part B depends on what coverage individuals have when they turn 65. If an individual, or their spouse, has employer-based coverage from a current employer with 20 or more employees, then they can delay enrollment in Part B without penalty. Active duty service members and their spouses can also choose to use TRICARE to delay Medicare enrollment. These individuals can utilize their current coverage instead of enrolling in Medicare Part B and paying Part B premiums.
Employer health coverage from employers with fewer than 20 employees, retiree health benefits, and insurance through COBRA extensions do not allow for penalty-free delays in Medicare enrollment.
If individuals elected to take Social Security benefits before the age of 65, then they are automatically enrolled in Medicare Part A and B. These individuals cannot decline Part A coverage. If an individual already enrolled in Social Security wishes to decline Part B coverage, they will have to send back their Medicare card and request a Part A only card.
Individuals who have not already signed up for Social Security should first enroll in Medicare in a seven month window. Each person’s window is the three months before the month when the person turns 65, the month when a person turns 65, and the three months that follow. If individuals fail to enroll in this period and do not have coverage that allows for delayed enrollment, they may face a late-enrollment penalty of higher Part B premiums for every year of delayed enrollment.
Once individuals no longer work for the employer that provided coverage that permitted delayed Part B enrollment, they must apply for Medicare Part B within eight months and provide proof of their prior coverage to avoid any late enrollment penalties.
To discuss Medicare enrollment and your broader estate plan please call Martha C. Brown & Associates at (314) 962-0186.