Medicare is an insurance program for people 65 and older or under 65 with specific disabilities. Once you qualify for Medicare, you must enroll at the right time to avoid late penalties. When you should apply for Medicare depends on your situation. While most people apply at age 65, some people delay Medicare until a later date.
Retiring at 65 or earlier
If you plan to retire at 65 or earlier, you should apply for Medicare during your Initial Enrollment Period. The Medicare Initial Enrollment Period starts three months before your 65th birthday, goes through your birthday month, and ends three months after.
Your Initial Enrollment Period starts on the first day of the month and ends on the last day of the month. For example, if you turn 65 on September 16th, your Initial Enrollment Period begins on June 1st and ends on December 31st.
You should apply for Medicare before your birthday month starts, so your Medicare is effective when you turn 65. When you apply during your birthday month or any time after, your Medicare start date is delayed.
However, if your birthday is on the first of any month, your Initial Enrollment Period will be eight months long instead of seven months. If you turn 65 on September 1st, your Initial Enrollment Period begins on May 1st and ends on December 31st.
If your birthday is on the first, your Medicare can start a month early. For example, if your birthday is on September 1st and you apply for Medicare during May, June, or July, your Medicare will start on August 1st instead of September 1st.
Collecting Social Security before turning 65
Some people are auto-enrolled in Medicare. If you start taking Social Security benefits at least four months before turning 65, then you will be auto-enrolled in both Part A and Part B. In this case, you get your Medicare ID card in the mail about two to three months before your 65th birthday.
Retiring after 65
Lately, seniors have been deciding to work past 65 for various reasons. When you work past 65 and continue to have employer coverage, you may be able to delay enrolling in Medicare and avoid late penalties.
Having large employer coverage past 65
A large employer is an employer with over 20 employees. If you are actively working past 65, while maintaining employer coverage through a large employer, you can delay all parts of Medicare until you lose your employer coverage. However, most people earn premium-free Part A, so you can go ahead and enroll in Part A when you’re first eligible for extra inpatient coverage. Part A pays after your employer coverage.
On the other hand, if you have a health savings account and want to continue contributions, delay Part A as well. You can’t contribute to a health savings account if you are enrolled in any part of Medicare.
If you delay Part A because you want to continue contributions to your health savings account, you should stop contributions six months before you plan to enroll in Part A. When you apply for Part A after your Initial Enrollment Period has passed, your Part A is retroactive up to six months. You should stop contributions to your health savings account to avoid IRS penalties.
Having small employer coverage past 65
A small employer is an employer with fewer than 20 employees. If you actively work past 65 for a small employer, you will still need to enroll in Medicare during your Initial Enrollment Period. This is because Medicare is the primary payer, and the small employer coverage would be secondary.
However, if your small employer’s drug coverage is creditable to Medicare Part D, you can at least delay Part D until you lose employer coverage.
You will also need to apply for Medicare during your Initial Enrollment Period if you are self-employed and have a health plan through the marketplace. Marketplace plans are not creditable coverage for Medicare. Delaying Medicare because you have a marketplace plan would result in late penalties.
Information is provided by Boomer Benefits and written by Danielle K. Roberts, a non-affiliate of CWM, LLC, or Cetera Advisor Networks LLC. The opinions are those of the writer, and not the recommendations or responsibility of CWM, LLC., Cetera Advisor Networks LLC or its representatives.