Many people struggle over the decision of whether or not to join Medicare when they turn 65 and are still working. All of the mail you are receiving probably tells you that you should enroll. What they aren’t telling you is that if you wo​rk for a large employer (20 employees or more), you should think twice prior to enrolling. 

The reason that you should use caution is that enrolling in Part B of Medicare starts the clock for your Medigap Open Enrollment Period. The Medigap Open Enrollment Period starts the month that you are both 65 or older AND enrolled in Medicare Part B. This is the six-month window that allows you to enroll in ANY Medicare Supplement (Medigap) plan without answering any health questions or being denied coverage due to pre-existing medical conditions. If you choose to enroll in a Medigap plan outside of the Medigap Open Enrollment Period, you will need to qualify based on health. 

If you are worried about incurring a penalty if you do not enroll, check with your human resources department to see if your employer group plan counts as creditable coverage when it comes to Medicare. If you work for a larger employer, the large group insurance will be the primary payer, and Medicare (if elected) would be considered secondary. Those who work for small employers (less than 20 employees) need to apply for Medicare when they are first eligible because Medicare will be the primary payer in this situation. 

If you have missed your Medigap Open Enrollment Period, it is still possible to buy a Medigap plan if you can qualify based on health. If not, you can still enroll in a Medicare Advantage Plan or a Medicare Cost Plan (if available in your area) without having to answer health questions.

Unless you have a compelling reason to enroll in Medicare Part B while you are still covered by a large group employer plan, you are often better off delaying your Part B until you retire. This will preserve your Medigap Open Enrollment Period.

There are typically three different categories people fall into when joining Medicare. Knowing which one applies to you will help you avoid any delays in your start date. 

The first scenario is for those who are already receiving Social Security benefits. Medicare Parts A & B will start automatically when you turn 65. Your card should arrive in the mail three months before your 65th birthday month. Enrollment can be verified by calling Social Security or by logging onto your Social Security account.

The second scenario is for those who are not receiving social security before age 65 but plan to start Medicare at age 65. You can sign up for Medicare starting three months before the month you turn 65. To do this you can either sign up online at https://www.ssa.gov/benefits/medicare/ or by phone at 1-800-772-1213.

The last scenario applies if you are over 65 and have chosen to delay Medicare because you had coverage through an employer. You can sign up for Medicare at https://secure.ssa.gov/.../medicare-part-b-online.../, and you will need to provide proof of creditable coverage. If you sign up online, you need to have the ability to photograph or upload documents providing proof of qualifying coverage. The other option is to fill out the Part B Enrollment Form (CMS-40B) and Request for Employment Information (CMS-L564) and fax or mail them to your local Social Security office or upload them on the Social Security website.

CMS-40B https://www.cms.gov/.../CMS-Forms/Downloads/CMS40B-E.pdf
CMS-L564 https://www.cms.gov/.../CMS-Forms/Downloads/CMS-L564E.pdf

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When you first elect to take Medicare, you have three options. It is important to fully understand your options when you first enroll because what you choose today might mean that your choices are limited in the future. Also, many are surprised to find out that Medicare is not free. You must pay a monthly Part B premium which is $148.50 in 2021.

Option 1 - Medicare Part A & B alone - Few people elect to only have Medicare. The biggest out-of-pocket expenses with this option are the Part A deductible and the 20% Part B coinsurance. Part A of Medicare is what covers the inpatient hospital expenses. The Part A deductible for 2021 is $1,484, and it resets every 60 days meaning that you could pay it more than once in a calendar year. Part B is the part that covers doctors and outpatient services. Medicare will pay 80% of the Part B expenses leaving you with the remaining 20%. There is no cap on this amount. This option leaves you with a lot of potential risk.

Option 2 - Medicare Part A & B paired with a Medicare supplement - A Medicare supplement will help to limit your out-of-pocket expenses. These plans are referred to by letters. Plan G and Plan N are the most popular plans. They are purchased from private insurance companies, and they are all standardized. This means that a Plan G with one company must provide the exact same benefits as Plan G with another company. The only difference between the plans is the price you pay. With Medicare Supplement plans, it is easy to predict your out-of-pocket expenses. For instance, with a Plan G, you can spend a year in the hospital and it will not cost you anything other than your monthly premium. Most importantly, you have a six-month window when you are new to Medicare when the insurance companies are required to accept you regardless of medical conditions. If you later decide you would like to enroll in a Medicare Supplement, you will have to answer health questions and can be denied based on your health. These plans do not have prescription drug coverage. You will want to purchase a Part D drug plan to avoid paying a penalty. 

Option 3 - Medicare Advantage - With this option private insurance companies contract with the government to provide your Medicare coverage. These plans are similar to employer-sponsored plans which require networks and pre-approvals for certain services. They are an all-in-one plan, providing both your medical and prescription drug coverage. These plans have lower premiums but require copayments when you utilize services. There are HMO  and PPO plans. The HMO plans only cover emergency care outside of the plan’s network. The PPO plans have coverage outside of the network but will typically have a higher copayment. You are protected by a maximum-out-of-pocket limit set by the plan. These plans also have extra benefits such as some coverage for dental, vision, and hearing. These benefits change from year to year, so you should not choose this option based on the extra benefits. You will want to make sure that all of your prescription medications and doctors are covered by the plan you select. These plans do not require medical underwriting.
Ultimately, the decision is yours. Some like the peace of mind that the Medicare Supplements provide. Others are okay following the rules of the Medicare Advantage plans to have lower premiums and to receive the extra benefits.