More Americans are working past 65 and still have employer-sponsored insurance. However, the intersection of Medicare and employer coverage features a number of traps for the unwary and a few of those traps accompany real financial consequences.
This makes it more important than ever that you simply (and your employer) understand the complex rules for starting coverage under Medicare. This blog post will identify a number of the traps in these rules.
Medicare Part A and HSAs.
If you (or your spouse) have paid Medicare taxes for a minimum of ten years, you are doing not pay monthly premiums for Medicare Part A (hospital) coverage. Because Part A doesn’t require premiums, most workers start Part A at 65 albeit actively employed.
• Trap 1: Once Part A starts, you’re not eligible to contribute to a Health bank account (HSA). So, if that HSA deduction is vital to you, then you would like to form sure you are doing not enroll partially A at age 65.
• Trap 2: Once you check in to receive Social Security benefits, you’re also (automatically) applying for Part A coverage. So, the sole thanks to defer Part A coverage (and retain that HSA contribution) is to also defer commencement of your Social Security benefits.
• Trap 3: Once you’re doing enroll partially A and you are over age 65, your Part A enrollment is effective retroactively for six months. So, you ought to stop making HSA contributions 6 months before you begin your Medicare Part A coverage.
Medicare Part B and Late Enrollment Penalties.
Medicare Part B (physicians and outpatient) coverage does require a monthly premium then , if you’ve got other coverage, it’s going to be tempting to defer Part B until the opposite coverage stops.
But a warning – if you are doing not enroll partially B once you first become eligible you’ll be subject to a big penalty. However, there’s no penalty if you defer Part B and you’ve got certain (but not all) other health coverage.
As an FYI, the penalty is 10% of your Medicare premium for each full 12-month period once you were eligible for Part B but didn’t enroll. for instance , if you waited for 3 years to enroll, your penalty might be 30% of the premium, so once you enroll partially B you’d pay your Part B monthly premium, plus 30%.
Here is that the kicker – you pay this penalty for as long as you’ve got Part B (in other words, for the remainder of your life after you retire).
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Here are a number of the traps:
• Trap 4: The late enrollment penalty doesn’t apply if you’ve got coverage from your employer (or your spouse’s employer) which coverage is due to current employment. So, if you’ve got COBRA coverage or retiree health coverage, you ought to not delay your Part B enrollment.
• Trap 5: The late enrollment penalty doesn’t apply if you’ve got employer coverage as long as the employer has a minimum of 20 employees. So, you ought to not delay Part B enrollment if your coverage is from a smaller employer.
Working past 65 can have significant personal and financial rewards and retaining your employer health coverage after you reach age 65 are often a true benefit.
However, Medicare’s rules for coordinating Medicare eligibility and employer coverage contain a variety of traps for the unwary. Avoiding these traps can help confirm you fully enjoy the advantages of working after 65.