Should I Go on Medicare if I’m Still Working at 65?

A lot of people who are still working once they reach Medicare age aren’t certain whether they really need to sign up for Medicare during the seven-month Medicare Initial Enrollment Period in which they turn 65.

For most Americans reaching Medicare age—working or not—there aren’t many good reasons not to enroll in Medicare at age 65.

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But here are a few reasons people still working at 65 give from time to time to explain their decision not to enroll in Medicare:

My employer provides health insurance. 

It’s understandable that many employees 65 and over are comfortable with the private insurance they may have had for years. It’s understandable they don’t want to give that up. But many people don’t understand they don’t have to give up their private insurance in order to enroll in Medicare.

Medicare is compatible with the private health insurance your employer provides.

If you have private health insurance, you don’t need to cancel your current plan in order to enroll in Medicare. More important, enrolling in Medicare won’t decrease your current health benefits.

Your private plan will continue its current coverage, and Medicare will become your secondary payer. This means Medicare will increase your coverage by helping cover some of the costs your private plan doesn’t cover.

If you’re a military veteran receiving Veterans Affairs health benefits, Medicare is equally compatible with the VA Medical Benefits Package. If you’re 65 with VA health benefits, enrolling in Medicare will bolster your VA coverage without reducing any of your veterans benefits. By enrolling in Medicare, you’ll have greater flexibility when it comes to managing your healthcare, and your treatment won’t be limited to VA facilities.

Regardless of the health coverage you currently have, if you’re still working at age 65 there’s usually no reason to delay enrolling in Medicare simply because you already have health coverage.

I don’t want to pay any extra premiums. 

Well, who does? But if you’re happy with your current plan and it provides the coverage you need, you can probably sign up for Medicare without having to worry about monthly premiums. Although there is a monthly premium for everyone enrolled in Medicare Part B, staying enrolled in Part B isn’t mandatory. If your current plan provides good medical coverage, you can disenroll from Medicare Part B. You can limit your Original Medicare enrollment to Part A, which provides basic hospital coverage and is available premium-free to people who paid into the system (or whose spouses paid into the system) for at least ten working years. Over 98% of seniors are eligible for premium-free Part A coverage.

I don’t need Medicare right now, so why should I enroll?

As far as Medicare is concerned, you need to look to the long term. You may think you don’t need it now, but it’s important to look at the possible long-term costs of not enrolling in Medicare when you’re first eligible to do so.

Consider:

Signing up for Medicare during your Initial Enrollment Period eliminates late enrollment penalties you may have to pay if you enroll in Medicare later. These penalties include the Medicare Part B late enrollment penalty and the Medicare Part D late enrollment penalty.

If you opt out of Part B but decide to enroll later, in most cases you’ll have to pay a penalty of 10% of your Part B premium for every 12-month period you could have had Part B coverage but didn’t. This penalty will apply as long as you remain on Medicare. There are exceptions to this penalty obligation, but most late enrollees in Medicare Part B pay dearly for the delay. If you opt out of Part B, future opportunities to enroll will be limited to regular annual enrollment periods.

The Medicare Part D late enrollment penalty is currently set at 1% of the average Medicare prescription drug plan premium—which in 2013 averages a little  over $30 per month. You may be exempt from the Part D penalty, however, if you had creditable (similar or better) drug coverage during the time you were eligible for Medicare Part D coverage but weren’t  enrolled in a Part D prescription drug plan.

If you enroll in Medicare after your Initial Enrollment Period and don’t qualify for premium-free Part A coverage, you may also be obligated to pay a Part A late enrollment penalty.

Your employer may be providing the coverage you need for now, but don’t neglect to look at the long-term implications of not enrolling in Medicare when you’re first eligible.

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