You need to be 65 if you want to avail Medicare. However, Medicare might not be your priority if you are on the verge of attaining the age of 65 and you are receiving medical coverage with the health insurance provided by your employer. While everyone doesn’t need to sign up for Medicare, many need to enroll themselves if they want to avoid shelling out penalties for late enrolment. You might have to continue paying the penalties for a long time. If you are assuming that you don’t require to sign up for Medicare, it can be a grave mistake on your part. So, should you get Medicare or not? Here is what you must know.
How Many are 65 and Still Working?
If the recent reports are to be considered, something in the ballpark of 45 million workers belongs to the age group of 65 and older group. According to the Bureau of Labor Statistics, it comes to around 17.9% of the total number of people who belong to that age group. The share has been rising over the past few years even though the economic crisis brought around by the COVID-19 pandemic has forced many people to take retirements. Aside from that, many have lost their jobs due to the crisis.
In January 2020, a time when the pandemic didn’t yet start wreaking havoc, 19.7% of the people from the age group of 65 and older were found to be working. A lot of people, aged more than 65, lost their jobs when the pandemic unleashed its devastation. Post that, many opted for Medicare for primary health coverage. That pace has decelerated quite a bit. Unless there is an exception like being covered by an employer-provided health plan, you have seven months in your hand – three months before you turn 65, the month you turn 65, and three months after you turn 65, to enroll for Medicare.
Medicare is usually of two types – Part A, i.e. the hospital coverage, and Part B, i.e. the coverage for outpatient care services. You needn’t worry about premiums in the case of Part A if you have a minimum work history of 10 years throughout which you have made contributions to the plan through payroll taxes or self-employment taxes.
As far as Part B is concerned, there is a monthly premium that you have to pay. For 2021, the standard amount is $148.50. However, beneficiaries who earn more pay more. 43% of those who sign up for Medicare prefer to have their Medicare Part A and Medicare Part B benefits catered to them through Part C or the Advantage Plan. The Part C plan also comprises Part D which deals with prescription drugs. There might be or might not be a premium associated with that.
The remaining 57% choose basic Medicare and might attach the Part D plan as well as the Medigap Policy. People with higher earnings shell out more in case of drug coverage. The penalties you incur for late enrolment can be lifelong. For Medicare Part B, the fine is 10% each year. For the Part D plan, you will have to shell out a penalty that amounts to 1% of the base premium which, in 2021, amounts to $33.06.
Working for a Big Business
If you are employed with a company with an employee strength of 20 or more, you can postpone your Medicare enrolment until you take retirement. A majority of individuals having a large group of health insurance tend to get enrolled for Part A (as it’s free) but postpones signing up for Medicare Part B.
But, in case you have paired your health savings account with a high-deductible health insurance policy through your employer, you won’t be able to contribute to your plan after signing up for Medicare, even if it’s Part A that you have enrolled for. Also, if you decide to stick to your current coverage and make a delay in signing up for any Medicare plan, ensure that the plan has coverage that makes you eligible for Medicare Part B as well as Medicare Part D.
Working for a Small Business
If you are receiving health coverage through a company that has an employee strength below 20, signing up for Medicare by the age of 65 is a good idea, irrespective of the fact whether you stick to the employer plan or not. However, your decision to opt-out of employer coverage and choose Medigap as well as Medicare Part C or Part D plan might prove to be cost-effective. Individuals working for small businesses happen to shell out higher premiums than those who work for big businesses.
If you are already covered under a workplace insurance plan, the Medicare enrolment rules would depend on whether you are working for a big business or a small business. If you miss the enrolment window, you might have to face penalties for delaying.