If you enroll in Medicare this year, you’ll likely find that Medicare is a maze. The coverage can be pretty different from employer insurance or Obamacare. Medicare is provided by the federal government and can be used nationwide. However, since Medicare does not cover all costs for hospital and medical services, you may consider enrolling in an additional plan to help with those costs.
However, before you enroll in Medicare, you’ll want to know these five facts.
You Must Keep Medicare Parts A and B to Enroll in a Medicare Plan
Once you enroll in Part A and Part B, you can choose between a Medicare Supplement plan or a Medicare Advantage plan. Medicare Supplement plans act as secondary insurance and help cover the costs once Medicare pays. They will only cover services that Medicare covers. There are ten standardized plans and two high-deductible plans. The High-Deductible Plan G has become more popular as it has a low premium and relatively low deductible. You can learn more about this plan option at boomerbenefits.com/medicare-supplemental-insurance/medicare-supplement-plans/high-deductible-plan-g.
The other option is a Medicare Advantage plan. When you opt for an Advantage plan, you receive your Part A and Part B benefits through the plan. You must stay enrolled in Parts A and B and pay the Part B premium to enroll in an Advantage plan.
Health Savings Account Contributions Must Be Stopped
Health Savings Accounts (HSA) are a great way to save money for medical-related services. However, you cannot make contributions once you are enrolled in Medicare; otherwise, the IRS could penalize you. If you plan on beginning Medicare during your Initial Enrollment Period, then you’ll want to stop contributions the day before the 1st of your 65th birthday month. However, if you delay Medicare past 65 due to creditable coverage, then you’ll want to stop contributions six months before you apply for Medicare.
Your employer must stop contributions as well. However, you can use the funds in the HSA to pay for qualifying services.
There are Penalties with Medicare
Everyone has a 7-month window to enroll in Medicare Part A and Part B. This window surrounds your 65th birthday month. If you don’t have creditable coverage from a large employer and fail to enroll in Medicare during that 7-month window, you will be penalized.
You will pay the penalty if you must pay the Part A premium, do not have creditable coverage and fail to enroll during the right window. The penalty is 10% for every twice the number of years you should have been enrolled in Part A. Most people qualify for premium-free Part A and, therefore, don’t have to worry about this penalty.
The Part B penalty is 10% of the national base premium for every 12 months you go without coverage. This penalty is lifelong, and you would pay it once you enroll in Part B.
The Number of Employees Matters with Medicare
Employer coverage is considered creditable for Medicare when there are more than 20 employees. You can delay Medicare with no penalty when you actively work for a large employer with 20 or more employees.
However, if there are less than 20 employees, you must enroll in Part A and Part B during your 7-month window. Small employer insurance is secondary to Original Medicare, so you must enroll in both parts.
Now, if you qualify for Medicare early, then that number changes.
You Can Qualify for Medicare before 65
Many people are unaware that you can qualify for Medicare before 65. If you receive Social Security Disability Income (SSDI) for at least 24 months, you’ll be automatically enrolled in Medicare Parts A and B. However, if you or your spouse actively work for an employer with at least 100 employees, you can delay Medicare with no penalty.
There are many things to consider before you enroll in Medicare. Will you be working past 65? If so, are there more than 20 employees? Have you stopped contributing to your HSA in time? All of these questions will help you determine when you need to enroll in Medicare and how you can avoid the penalties.