Understanding the Medicare Rules

June 21, 2023

Medicare, Medicare Costs, Medicare Enrollment, Part D

Are you Turning 65 but Not Retiring? Many people still work beyond the age of 65, and remain on their employer’s group health insurance. You can keep this insurance in place and waive Medicare’s Part B Medical insurance if you choose. Medicare Part A (Hospital) is free if you worked at least 40 quarters (or 10 years) in the US and paid into Medicare. Sometimes your group health insurance (companies with fewer than 20 employees) requires you to take out Medicare, but not always. If you elect to stay on your group health plan, this is considered creditable coverage.

HSA Plans and Medicare:  If you are still working and have an HSA compatible plan (High Deductible Health Plan) and you plan on still contributing to your HSA account, you cannot enroll into Medicare Parts A or B. With an HSA compatible plan, you cannot have another health plan and Medicare would be considered that. However, if you work for a company that has fewer than 20 employees, you must enroll in Medicare A&B. If you’re not sure, contact Medicare to be absolutely sure. 

Part B Penalty:  If you don’t have creditable coverage and you don’t sign up for Part B when you’re first eligible, you’ll have to pay a late enrollment penalty which sticks with you for the rest of your life. You have 8 months from the time you’re eligible to enroll in Part B, to obtain it. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it. If you miss your Initial Enrollment Period or your Special Enrollment Period, you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B, and then the coverage will start July 1st of that year.

Part D (Prescription Drug Plan): Medicare requires you to have prescription drug coverage either by purchasing a stand-alone Part D plan or a Medicare Advantage plan that has a drug plan built into it. If you don’t purchase a drug plan or Advantage plan within your initial coverage election period (7 month window), you could be subject to a Part D penalty as well. If you maintain group or Cobra coverage, then you have creditable coverage and you won’t be penalized.

Do you qualify for Low Income Subsidy (LIS) or Part D Extra Help?  If you have limited income and assets (excluding your house), the state may help you pay for Part B. You may also qualify for Extra Help to pay for your Medicare prescription drug coverage. This helps you lower your prescription drug copays and for many, keeps your prescription costs very low while in the coverage gap or ‘donut hole’. Check with Medicare or Social Security to see if you qualify or ask a local agent for guidance. If you qualify, you will have Special Enrollment Periods which allows you to enroll in any plan in each quarter every year. Feel free to contact us for help. Our services are always free. We can be reached at michele@mcinsurance.com or 408-848-2271.

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