Looking back over the past four decades, age 65 signaled when you would exit from your career, begin your pension, request that you receive your social security benefits, and enroll yourself in Medicare.
Well, times have changed.
The path to retirement has changed since then. The full retirement age for retirement is now age 66 or 67. The good old-fashioned corporate pension has been swapped out with the 401(k) plan, which typically is taken as a lump sum upon leaving a job at any age rather than in the form of monthly payments starting at age 65. An even more significant element here is that many baby boomers are deciding to work well into their 60s and 70s. So the question faced by many is: Do you need to enroll in Medicare if you’re still working at age 65?
One factor that hasn’t changed since that time is the desire to find quality health coverage and an individual’s eligibility for Medicare. Medicare eligibility remains at age 65. In addition, most individuals must sign up for Medicare at age 65 or receive possible penalties. Why is this rule in place? This national health insurance program can only work if everyone within the age category, sick or healthy, signs up for the program. The program will not work if people wait until they are sick to sign up for the program. This reason is why Medicare imposes penalties for late enrollment.
Employer-Based Coverage
There is one exception to the rule of being required to sign up for Medicare when you are 65. If you or your spouse are still working, and a group plan covers you through your employer covering 20 or more employees, you do not have to enroll in Medicare at age 65. You may stay on your employer’s group plan if you or your spouse are still working. However, once that employer concludes that coverage, you must enroll in Medicare.
If you are retired and covered by a COBRA or retiree plan when you turn 65, you must sign up for Medicare. Also, if you are self-employed or retired and covered by an individual health insurance policy when you turn 65, you must sign up for Medicare. Finally, as mentioned before, if you are still working and covered by an employer plan with fewer than 20 employees when you turn 65, you must sign up for Medicare.
What are the Penalties if You Don’t Enroll?
You should be aware of a couple of penalties if you do not enroll in Medicare if your situation dictates you are required to do so. First, you may be penalized for a late enrollment fee when you eventually do enroll. This penalty fee will be added to your regular Part B premium payment and continue throughout your life. The penalty is 10% of the premium of your Medicare Part B plan for every 12 months that you were supposed to have enrolled but didn’t.
The other penalty is more unfortunate. You may not end up with health insurance. In the United States, unless you are covered by an employer group with 20 or more employees, Medicare is the primary payer for those over 65. If you are not covered by an employer plan such as this and receive medical treatment for an accident or illness at age 65 or over, the bill will be sent to Medicare. If you are not enrolled in Medicare, they will not pay. And if you have any other insurance, such as an individual policy or small group plan, they will not pay either because it is Medicare’s responsibility.
If you are still working and over 65, you will want to talk to your current health insurance group plan or benefits administrator. Suppose an employer group plan still covers you. In that case, you may still be advised to enroll in Part A, or it may be possible that you need to enroll in Part A and Part B to transition to an alternative type of health insurance policy that works with Medicare.
The best course is to ensure you do not ignore this Medicare coverage issue when you turn 65.
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