If you will be turning age 65 soon, it is likely that you’ve received a ton of mail in your mailbox about signing up for Medicare. Original Medicare – which consists of Medicare Part A and Part B – or a Medicare Advantage plan (also known as Medicare Part C) can provide you with many of the same coverage features, along with some added items such as vision, hearing, and/or wellness benefits.
While Medicare can offer a range of health care coverage, if you are already enrolled in an employer-sponsored health plan (either through your own employer or that of your spouse), do you really need to enroll in Medicare now?
The answer is, it depends.
Even if you currently have health insurance coverage when you turn age 65, it will still be important to determine whether or not you should move forward with enrolling in Medicare. For example, for many people, Medicare Part A (hospitalization coverage) is premium-free.
Because of that, it will oftentimes make sense to go ahead and take Medicare Part A – even if it means that you will be covered under two health plans. With regard to Medicare Part B (doctors’ services), there are some items to consider before you move forward – one of these being whether or not you will be penalized if you don’t sign up during your initial enrollment period.
In this case, everyone must pay a monthly premium for Medicare Part B. For most Medicare beneficiaries, the Part B premium is $134 per month (in 2018). However, if your income from two years prior is above a certain threshold, then you may be charged more – up to $428.60 each month.
There is also a Medicare Part B deductible of $183 per year (in 2018), which needs to be satisfied before your benefits will begin to pay out. So your Medicare Part B out-of-pocket expenses could be a key factor in whether or not you enroll in this coverage if you are already covered by another health plan.
In addition to the monetary costs, there are some additional items to consider with regard to enrolling in Medicare Part B if you are a participant in another health care insurance plan. As an example, if you are qualified for Medicare, your employer-sponsored coverage may start to work a bit differently. With that in mind, you will have to determine whether having both plans will actually be beneficial for offsetting your overall health care expenses.
In this case, it is important to decipher whether your current non-Medicare coverage will be considered as the primary or the secondary carrier when the time comes for paying your benefits.
A primary insurer will pay first. Therefore, if you have employer-sponsored (or other) health insurance coverage that is primary, you may not need to enroll in Medicare Part B – unless having both Part B and your current coverage will significantly offset your overall health care expenses.
Secondary insurance carriers will typically pay some – or even all – of the expenses that are not paid for by the primary coverage. As an example, Medicare Part B generally requires a 20% coinsurance amount for durable medical equipment.
In this instance, if Medicare is the primary coverage, it will generally pay for 80% of these expenses, and your secondary coverage – your employer-sponsored or other plan – could then pick up the remaining 20%.
When reviewing which coverage would be primary and which would be secondary, it is important to keep in mind that in many cases, without primary coverage, the secondary insurer won’t pay anything at all.
With that in mind, if it turns out that your current health care coverage will be the secondary insurer, then it may be beneficial for you to go ahead and enroll in both Medicare Part A and Part B.
When the time comes for your employer-sponsored health insurance coverage to end, you will then have 8 months to enroll in Medicare Part B without incurring a penalty. This is the case regardless of whether or not you enrolled in COBRA coverage when your other coverage ended.
If you do not enroll in Part B of Medicare during this period of time, you will need to pay a late enrollment penalty when you eventually sign up – and the longer you wait to enroll in Medicare Part B, the higher the penalty can be.
For example, your monthly premium amount for Medicare Part B could increase by 10% for each full 12-month period that you could have enrolled in Part B, but didn’t. And, you will have to pay this higher premium amount for as long as you are covered by Medicare Part B.
Depending on your situation, it may or may not make sense, then, to move forward with enrolling in Medicare Part B, or instead to wait on this particular coverage until the time is right for you.
If you’re currently covered by a health insurance plan and you’re having trouble deciding whether or not enrolling in Medicare Part B will be beneficial, it can be helpful to discuss all of your potential options with a Medicare insurance agent, or Social Security representative. Don’t forget about your company’s HR department, either.