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Medicare Part B and working after 65

Finance & Planning | Feb 12, 2016

At 65 years old, you become eligible to receive Medicare, but are you required to enroll right away? In general, when you do not enroll during your initial enrollment period you will be subject to late enrollment penalties if you sign up at a later date. What if, however, you or your spouse have not yet retired at 65 and you still receive health insurance through an employer?

Most of the time, if that is the case you will not be penalized for waiting to join Medicare Part B.

If you are eligible to enroll in Medicare Part A for free (meaning you have worked and contributed to Social Security for at least 10 years), you should enroll right away because it won't cost you a cent.

"You are eligible to delay Part B enrollment when you have group health coverage through a union or employer."

Part B, on the other hand, requires premiums, so if you are already receiving insurance from an employer, you can usually delay your Medicare Part B enrollment without any penalties. According to the Department of Health and Human Services, you are eligible to delay enrolling in Part B when you or your spouse continue to work and have group health coverage through a union or employer. In this case, you become eligible for what the government calls a special enrollment period.

What is a special enrollment period?
Your special enrollment period lasts eight months and begins one month after either you or your spouse stop working or health coverage ends (measure from whichever happens first). If you enroll during this period, you will not have to pay late enrollment penalties, even if it has been several years since you have turned 65.

What if you retired and enrolled in Part B, but then you decided to return to work? HHS said if your employer offers you group health coverage, you can drop Part B and re-enroll at a later date with no penalty. Keep in mind, though, that you only get one open enrollment period for MediGap. When you decide to re-enroll in Part B, you will not get another one.

"If you are receiving COBRA benefits, you will not be eligible for the special enrollment period."

When are you ineligible for the special enrollment period?
According to AARP, there are a three main instances when, even if you continue to work, you will not be eligible for the Medicare Part B special enrollment period:

  1. If the company providing your health coverage has 20 or fewer employees, you may need to enroll in Part B. Only employers this small are legally allowed to require their employees to make Medicare their primary insurance when they turn 65.
  2. If you are receiving COBRA benefits - meaning an employer still gives you healthcare for a brief period after you or spouse stopped working - you will not be eligible for the special enrollment period and should enroll in Part B when you are initially eligible.
  3. If you are in a domestic partnership and use your partner's health insurance, most of the time you will not be eligible for special enrollment.

If I don't qualify for special enrollment, when should I enroll?
If you do not qualify for special enrollment due to one of the reasons listed above or because you stop working at 65, you will want to enroll during your initial enrollment period to ensure you don't pay any late enrollment penalties. The initial enrollment period begins three months before the month in which you turn 65 and ends three months after your birthday.