Many people who are still working wonder whether it is mandatory to sign up for Medicare at age 65. In fact, it’s one of the most common questions we get from our readers on our Facebook page and on our Youtube Channel.
Not knowing the proper answer to this question could cost you, literally. So, is it mandatory to sign up for Medicare at age 65?
The straightest answer I can give you is yes and no. Here’s why:
Your specific circumstances affect the answer to the Medicare at 65 question. In order to discover a more precise answer for this question for YOU, you will need to answer some questions.
- Are you retired?
- Are you still working?
- If working, how many employees does the company that you work for have?
- How rich is your employer group health coverage?
The answers to these questions will ultimately determine your personal answer for that frustrating question – Is it mandatory to sign up for Medicare at age 65?
Did You Answer “Yes” to Question 1?
If so, then you will most likely need to sign up for Medicare at age 65. Retirees that don’t sign up for Medicare when they first become eligible can suffer from late penalties.
If you are a retiree who has a retiree health plan provided by a former employer, then you need to sign up for Medicare Parts A and B. Medicare is primary to retiree health plans so if you don’t enroll, you’ll be penalized for not signing up for Medicare.
People with retiree health plans should sign up for Medicare when they are first eligible Usually, retiree health plans and Medicare work well together and provide substantial coverage.
On the other hand, maybe you’re a retiree whose former employer doesn’t offer retiree coverage, so you have an individual Health Insurance policy through the ACA marketplace exchange.
You’ll still want to sign up for Medicare at age 65 to avoid late penalties, delayed coverage, and loss of social security benefits. Visit this post for more information on why you should leave your ACA plan and transition to Medicare.
If you answered “No” to question 1 because you are still working, move on to question 2.
Did You Answer “Yes” to Question 2?
If you are still working, then we immediately move to the next question, which is “how many employees does the company that you work for have?” Your answer will determine whether or not you will need to sign up for Medicare at age 65.
Was your answer, “less than 20 employees”?
Then you will need to sign up for Medicare as soon as you’re eligible. If you fail to enroll in Medicare when you become eligible while working for a company that has less than 20 employees, you will incur late enrollment penalties. Medicare is primary when you work for a small company, so you need both Parts A and B.
Was your answer, “20 or more employees”? Great, then you have options.
Options for Employees with Large Employer Coverage
The first, and possibly the most favored option is delaying Medicare enrollment. The reason you can do this is that your employee group plan acts as your creditable coverage. When you have creditable coverage, you are able to delay signing up for Medicare until you lose that creditable coverage. There are no penalties because your employer coverage is primary, and Medicare is secondary. Many people enroll in Part A and delay Parts B and D until they retire.
However, you may not want to delay Medicare. Your answer to the fourth and final question will generally help you determine whether you want to enroll in Medicare and let it coordinate with your employer coverage or delay Medicare until later to save yourself from paying unnecessary Part B and D premiums while you are still working.
How Rich is your Employer Group Health Coverage?
Is it great, the best insurance you’ve ever had? Well good for you! You can rest easy knowing that you are covered well and don’t need Medicare yet.
Is your insurance anything less than stellar? Then you might want to think about having Medicare in addition to your group health plan.
As we mentioned, when you work for an employer with 20 or more employees, your group health plan is your primary coverage. Medicare would be secondary. If you were to have both Medicare and group coverage, your Medicare would supplement your group plan and may reduce some health spending. However, that might only be important to you if you have some health care spending going on and you just want more robust overall coverage. It’s up to you.
Medicare Part A
No matter your answer to question #4, we recommend that you sign up for at least Medicare Part A unless you are contributing into a health savings account and want to continue doing so. (You can learn more about that here.)
Why should you enroll in at least Part A? Well, for most people, Part A costs $0/month.
If you have worked at least 40 quarters in the United States, this is you. So, it doesn’t cost you anything to add Part A at age 65. If you have an inpatient hospital stay, that Part A coverage may help to reduce your spending under your group health plan.
Learn more about Medicare and Employer Coverage here.
A Word About Late Penalties
If you incur a late penalty, it will be tacked onto your Medicare monthly premium when you finally do enroll. The penalties stay in force for as long as you continue to be enrolled in Medicare.
With that said, if you were to never enroll in Medicare, you wouldn’t end up paying those penalties. However, lasting your entire life without ever needing to sign up for Medicare is unlikely.
Is it mandatory to sign up for Medicare at age 65? Not for everyone. It depends on your situation.
Can you be penalized for not signing up for Medicare at 65? Yes, you certainly can if you don’t have creditable employer coverage.
Does having creditable coverage mean you can delay signing up for Medicare? Yes.
Should you at least sign up for Medicare Part A? Yes, unless you plan on contributing to a health savings account.
Get Someone on Your Side with Medicare
If you’re able to answer the questions above, you will be equipped with the knowledge to answer whether it is mandatory to sign up for Medicare at age 65.
Medicare brings up many ifs, ands, and buts. It’s easy to get lost in the chaos of it all. That’s why beginning the Medicare process is so frustrating to most.
Instead of doing a cannonball into the pool of Medicare, test the waters. Take it one step at a time and get the help of an experienced Medicare broker like Boomer Benefits. Our help is free.