For the past four decades, age 65 marked the time when you would leave your job, start your pension, file for Social Security, and enroll in Medicare.
Since then, the retirement landscape has changed:
- Full retirement age for Social Security is 66 or 67.
- The traditional corporate pension has given way to the 401(k) plan.
- And, many Baby Boomers are continuing to work into their late 60s and even 70s.
Related: Will Working Longer Help – or Hurt – Your Social Security Benefit?
The one thing that hasn’t changed is the eligibility age for Medicare — it remains 65. In fact, most people are required to sign up for Medicare at age 65 or face possible penalties.
Why? It’s because the only way this national health insurance system can work is if everyone — the healthy and the sick — participate.
Now, there is one exception: If you are still working, or your spouse is still working, and you are covered by an employer group plan that covers 20 or more employees, you do not need to enroll in Medicare at age 65. You may continue to be covered by your employer group plan as long as you or your spouse is still working.
But, once that employer coverage ends, you must enroll in Medicare or face possible penalties.
This means that if you are retired and covered by a retiree plan or COBRA when you turn 65, you must enroll in Medicare.
If you are retired or self-employed and covered by an individual health insurance policy when you turn 65, you must enroll in Medicare.
If you are still working and covered by an employer plan that covers fewer than 20 employees when you turn 65, you must enroll in Medicare.
Related: 11 Answers to the Most Important Medicare Questions
What Happens If You Don’t Enroll in Medicare When You Are Supposed to?
Two things. One, you may be charged a late-enrollment penalty when you eventually do sign up. This penalty will be added to your regular Part B premium and continues for the rest of your life. The penalty is 10% of the Part B premium for every 12 months you should have had Part B but didn’t.
The second consequence is more dire. You may not have health insurance. In the United States today, Medicare is the primary payer for everyone over the age of 65, unless they are covered by an employer group plan that covers 20 or more employees. If you are not covered by such a plan and you incur a medical expense, the bill will be sent to Medicare. If you are not enrolled, Medicare won’t pay the bill. And, any other insurance you do have — such as an individual health insurance policy or a small group health plan — won’t pay the bill either, because it is Medicare’s responsibility.
If you are still working past age 65 and wondering how your health insurance works with Medicare, speak to your benefits administrator or current health insurance company. We are also available to help. You can schedule a complimentary consultation below.
Get instructions on how to enable our Flash News Briefing skill to your Amazon devices:
Bautis Financial Advisor Commentary: August 1, 2023