By Mark Harvey
Many of us can easily remember when the “norm” was that retirement, Social Security and Medicare all hit at the same time. That is, when we retired, we knew it was time to sign up for Social Security and Medicare.
So much for norms, because now many of us plan on continuing to work (for any number of reasons that are pretty obvious to most of us) when the big “65” hits. This seems to confuse an already confusing situation, so let’s take a quick look at the Medicare side of that scenario — understanding that we’ll focus on what happens to most people most of the time, not every possible nuance, OK? Let’s do it.
First, if you worked for 10 years or more in the U.S., you’re eligible for premium-free Part A (think “hospital”) anytime from 65 on, and you will not have to pay a “late enrollment” penalty if you wait. Many of us who are still working just go ahead and enroll in Part A because … why not? Sure, you still have your employee insurance, which will probably pay as “primary,” but Part A is free.
What about Part B (think “doctor”), which involves a premium? You’ve heard that if you don’t enroll when you’re “supposed to” (age 65), there’s a penalty, right? Right — except that if you’re covered by insurance from your or your spouse’s work, you’ll be eligible for what’s affectionately referred to as a special enrollment period, or SEP. That means you’ll have an eight-month window from the time your current work or coverage ends (whichever comes sooner) to enroll in Part B without incurring the dreaded penalty or the wrath of Zeus. So you probably don’t need to spend money on the Part B premium now, and you won’t get hurt when you do sign up.
Heads up: You will not be eligible for an SEP if you delay enrollment while covered by retiree insurance (rare these days, but it still happens), or if you’re self-employed and covered by an individual plan. In those cases, you’ll have to wait for the next general enrollment period (Jan. 1 through March 31 of each year) for coverage that will kick in the following July 1 — and you’ll probably get slammed with the penalty.
Don’t do that.
So, how about Part D (think “prescription drugs”)? Good question.
You’ve probably heard there’s a penalty associated with Part D premiums if you don’t enroll in one when you’re first eligible. That’s right, unless you have “creditable coverage” under your employer’s plan. That means your employer’s drug coverage is equal to or better than Medicare Part D’s basic coverage.
If it is (and it often is), you should get a notice each year, around September, telling you so. Hang on to these notices and put them somewhere you can actually find them, because they are your “proof” that you had a creditable coverage all along and will not incur the penalty. When you stop working or lose that employer-provided coverage, you’ll have up to a two-month SEP to sign up for a Part D plan with no penalty attached.
We like that.
Other questions that come up a lot:
• How does current employee insurance coordinate with Medicare if I am 65 or better? Current employee insurance from your or your spouse’s work is the primary plan (meaning it pays first), with Medicare secondary, if your employer has 20 or more employees. Current employee insurance is secondary to Medicare if the employer has fewer than 20 employees.
• What protections do I have if my employer coverage is primary? Once you are eligible for Medicare, your employer cannot offer you coverage that’s different from that offered to non-Medicare employees. The employer also cannot refuse to cover you or restrict your coverage — nor can its insurance plan charge you more than non-Medicare employees, pay your providers less or require you to wait longer for coverage to begin because you made the strategic error of becoming Medicare-eligible.
Remember, Medicare.gov really is a pretty consumer-friendly source of info, if you take your time and read stuff several times. Also, you can always call any of the numbers at the end of this column for help, and decent people will help you without trying to sell you anything.
Last thought for today, and you’ve heard me say this before: You are not required to retire! Neither Social Security nor Medicare demands that you stop working. What you do need to do is understand how these things are done (which is not as complicated as we often imagine) — and then go about your life, because the rest of it is up to you.
Mark Harvey is the director of information and assistance for the Olympic Area Agency on Aging. He can be reached by email at harvemb@dshs.wa.gov; by phone at 360-532-0520 in Aberdeen, 360-942-2177 in Raymond, or 360-642-3634; or through Facebook at Olympic Area Agency on Aging-Information & Assistance.
