An individual must enroll in (or keep) Part B coverage if he or she wants to be able to join any of theMedicare Advantage managed care plans, Medicare medical savings accounts, Medicare supplement plans, or other Medicare health insurance options.
A person turning 65 or older can delay taking Part B if:
- he or she or his or her spouse (of any age) continues to work, and
- he or she is covered under a group health plan from that current employment.
If a person does not have group health plan coverage based on current employment, and he or she delays taking Part B, the Part B monthly premium will increase by 10 percent for each 12 months that he or she could have had Part B and did not enroll in Part B.
If a person does not enroll in Part B when they should have and did not have creditable coverage, then they may have a chance to sign up for Part B if they can qualify for a special enrollment period. The Part B insurance will start one month after the new enrollment. If a person chooses to delay taking Part B because he or she currently has group health plan coverage, then the person may be able to avoid paying this higher premium by signing up for Part B while he or she has this creditable group coverage in place. The person can also sign up within eight months after the employment ends or the group health coverage ends, whichever comes first.
If a person enrolls in Part B while covered by an employer plan or during the first full month when not covered by that plan, Part B coverage begins the first day of the month the person enrolls. If he or she enrolls during any of the seven remaining months of the special enrollment period, then coverage begins the month after enrolling. If the person does not enroll by the end of the eight-month period, then he or she will have to wait until the next general enrollment period that begins January 1 of the next year, with coverage going into effect the month following the enrollment. The beginning of the month that the recipient enrolls is also the first month that he or she is entitled to the Medicare supplement open enrollment (guaranteed issue) period, which lasts for six months.
Even if a person continues to work after turning 65, he or she should consider signing up for Part A of Medicare if the person qualifies for premium-free Part A. Part A may help pay some of the costs not covered by the employer plan. It may not, however, be advisable to sign up for Part B if the person has health insurance through his or her employer. He or she would have to pay the monthly Part B premium, and this would also trigger the six-month Medicare supplement open enrollment period, which cannot be changed or restarted. If an employer has 20 or more employees, the group health plan would be the primary payor and Medicare the secondary payor. In this case, the person could find value in Part B if the group health plan has high deductibles or coinsurance amounts. If an employer has fewer than 20 employees, Medicare would be the primary payor and the group plan would be secondary. Therefore, it might not be advantageous for the employee to enroll in Part B.
Another enrollment factor to consider is whether a person has a health savings account (HSA) and wants to continue to make contributions to the HSA. Enrollment in any part of Medicare makes a person ineligible to contribute further to an HSA. Under Medicare rules, COBRA is not considered to be creditable coverage. Consequently, delaying enrollment in Medicare Part B because one has COBRA will not avoid the Part B late enrollment penalty.
In summary, consumers will not be penalized for delaying Medicare as long as they enroll within eight months of losing employer-provided creditable coverage or retiring, whichever comes first.
