Many Are, But May Not Need to Be
If you are already collecting Social Security, you will automatically be enrolled in Medicare Parts A and B when you turn 65. If you delay enrolling in Medicare until after your 65th birthday due to creditable coverage (i.e., coverage at least as good as Medicare) through your or your spouse’s employer and are not yet collecting Social Security, you will automatically be enrolled in Medicare Parts A and B when you apply for Social Security.
Medicare Part A is free as long as you or your spouse have earned 40 Social Security credits. Medicare Part B comes with a monthly premium of at least $164.90, and possibly more, depending on when you enroll and what your modified adjusted gross income was two years prior.
If you work for an employer with 20 or more employees and have company-provided health insurance or health insurance through your spouse’s employer, you do not need Medicare Part B until your employer-provided health insurance ceases. The idea is that you keep Part A because it is free, but you opt out of Part B to avoid paying premiums, since you can sign up later without penalty. When your employer-provided health insurance ends, an eight-month special enrollment period for Medicare begins. During this special enrollment period, you can sign up for Medicare Part B penalty-free. Once your Medicare Part B enrollment takes effect, you will begin to pay Part B premiums.
Many individuals are paying Part B premiums even though they have creditable coverage due to their or their spouse’s employment. This is because they are collecting Social Security and their Part B premiums are automatically reducing their Social Security checks. They did not follow the instructions that came with their Medicare card, as they could have declined Part B by filling out the form and sending the card back only to receive a new card several weeks later showing enrollment in only Medicare Part A.
There are certainly several reasons for this. Many just do not realize what is happening, since they are automatically enrolled in Part B and their premiums reduce their Social Security checks – also automatically. Others are afraid to decline Part B, even though they do not need it, because they believe they will not be able to sign up later or that they will have to pay a steep penalty when they do sign up. A lack of understanding concerning enrollment periods, creditable coverage, and potential penalties definitely contributes.
Do not pay Medicare Part B premiums if you do not need to. If you are not sure whether you should be enrolled in Part B, contact Medicare by going to medicare.gov or by calling (800) 633-4227 and explaining your situation. A representative should be able to help you. You can also contact your state’s SHIP (State Health Insurance Assistance Program), which is staffed by unpaid volunteers available to take your questions and help you make informed decisions. For more information, contact Health Plan One at (888) 404-1516 or visit their Stifel-dedicated website at: www.medicareusa.com/stifel