Every day, seniors are deciding to work past 65. Because the senior working population continues to grow, more people are asking the question, “What is Medicare creditable coverage?”
Medicare creditable coverage is coverage that is considered to be just as good as Medicare, meaning that the coverage pays as well as Medicare does. When someone has creditable coverage for Medicare, he can delay enrollment in Medicare without owing a late enrollment penalty.
There are a few forms of creditable coverage for Medicare. However, the most common form of creditable coverage is a large employer group plan. Below, we will discuss the forms of creditable coverage and how they work with Medicare.
Large Employer Creditable Coverage
A large employer is an employer who has 20 or more employees. If you actively work for a large employer and are enrolled in their group health plan, then you have creditable coverage for Medicare. Also, if you are on your spouse’s large employer group health plan, you have creditable coverage.
Because a large employer group health plan is creditable coverage, people with this coverage can delay all parts of Medicare until they lose said coverage. However, Part A is $0 per month for most people, so enrolling in Part A is something to consider.
Part A can supplement your employer health plan when you have inpatient hospital stays. You can delay Parts B and D until later.
You won’t want to enroll in Part A if you are enrolled in a health savings account (HSA) though. You cannot contribute to your HSA if you have any part of Medicare active. To be able to continue HSA contributions, you’ll want to delay Part A as well.
However, if the HSA is under your spouse’s name, then you can enroll in Part A, and your spouse can continue to contribute the maximum amount to his or her HSA.
Small Employer Group Health Plans
A small employer is an employer who has less than 20 employees. If you actively work for a small employer, Medicare will be your primary coverage. Therefore, small employer group health plans are not creditable coverage for Medicare.
Even though the small employer group health plan isn’t creditable coverage for Medicare Part A and Part B, it may be creditable coverage for Part D. Check your Notice of Creditable Coverage to find out if your drug coverage is creditable coverage.
Each September, your employer should send out a Notice of Creditable Coverage. This notice states whether or not the drug coverage you have through your employer is creditable coverage for Medicare. Keep this notice filed away, as you may need it when you finally decide to enroll in a Part D plan.
VA Medical and Drug Benefits
Similar to small employer group coverage, VA coverage is not creditable coverage for Part A or Part B. However, VA drug benefits are creditable coverage for Part D. Although you may have medical coverage through the VA, you still might want to consider enrolling in Part A and Part B for a couple of reasons.
One reason VA beneficiaries should consider enrolling in Part A and Part B is so they can have medical coverage outside of the VA network. Part A and Part B will give them access to more options in hospitals and doctors. Another reason they should consider enrolling in Part A and Part B is so they can avoid future late enrollment penalties.
VA beneficiaries can also enroll in Part D if they wish. However, it isn’t necessary unless they want drug coverage outside of the VA.
Examples of Non-creditable coverage for Medicare
Unless you have a large employer group health plan, odds are you don’t have creditable coverage for Part A and Part B. If you have any of the following forms of coverage, you’ll need to enroll in Part A and Part B when you’re first eligible to avoid late penalties.
- Retiree insurance
- VA benefits
- Federal Employee Health Benefits (FEHB)
While none of these are creditable coverage for Part A and Part B, some of them may be creditable for Part D. Check with your benefits provider if your coverage is creditable for Part D.
If you have COBRA, you’ll need to enroll in Part A and Part B within 8 months of starting COBRA. For retiree insurance, you’ll need to enroll in Part A and Part B within 63 days of losing your active employer group plan.
If you have ChampVA or Tricare, you will need to enroll in Part A and Part B when you’re first eligible not only to avoid late penalties but also to keep your ChampVA or Tricare benefits.
FEHB is a little more complicated. While FEHB isn’t creditable coverage for Medicare, some FEHB enrollees still choose to delay Medicare. To figure out which coverage option is the most cost-effective for you, check out our YouTube video below on FEHB and Medicare.
How to Delay Medicare When You have Creditable Coverage
Delaying Medicare is much easier than people expect it to be. First, figure out which parts of Medicare you have creditable coverage for. When you have creditable coverage for each part of Medicare, you can skip the Medicare enrollment process altogether.
The tricky part comes when it’s time to enroll in Medicare.
Once you lose your creditable coverage, you’ll want to go to your local Social Security office and apply in person. Be sure to take your Notice of Creditable Coverage. This notice will exempt you from having to pay any late penalties that may have accumulated.
You may need to request a more recent notice from your employer that shows you had creditable coverage for each part of Medicare your delay for the entire time you delayed them.
Remember, just because you have creditable coverage for Medicare, doesn’t mean that the coverage you have is more cost-effective than Medicare. With Medicare, you may be able to get better coverage for lower premiums. You can call our team to compare Medicare options to your employer coverage.