Originally published 7/8/22, updated 10/2/23.
As employees approach retirement age, they may be looking forward to putting their feet up and cashing in on their senior discounts. But even if they won’t be working a 9 to 5, that doesn’t mean they don’t have things to worry about. One of the most significant concerns for older employees is healthcare. As they age, healthcare expenses tend to increase, and many employees may be unaware of the options available to them.
If you work with individuals nearing retirement age, they’ll probably have questions about when and how to apply for Medicare. Here are the answers to some of their most pressing questions.
Who qualifies for Medicare?
Many adults first become eligible for Medicare Part A (Hospital Insurance) and Part B (Medical Insurance) when they turn 65. But age isn’t the only qualification for Medicare eligibility.
People who are under age 65 are among those who are eligible for Medicare if they’ve received Social Security disability insurance benefits or Railroad Retirement Board disability benefits for at least two years. People who suffer from amyotrophic lateral sclerosis (ALS), also called Lou Gehrig’s disease, and end-stage renal disease are also automatically eligible for Medicare.
The rules are a little different for Medicare eligibility if employees work past 65 and their organization employs more than 20 people. If they have access to Employer-Sponsored Insurance, or if they’re on their spouse’s or partner’s insurance plan, they can wait to sign up for Medicare until they stop working or lose their health insurance coverage, whichever occurs first. The key is for them to sign up within eight months of losing coverage. If they wait too long and miss this special enrollment period, they’ll have to pay a monthly penalty if they sign up for Medicare Part B.
How to apply for Medicare
If employees are living in the United States or US territories (except Puerto Rico) and are already collecting Social Security retirement or disability benefits, they’ll be automatically enrolled in Medicare Part A and Part B as soon as they become eligible. A few months before they turn 65, or when they receive their 25th month of disability benefits, they’ll receive a detailed packet of information.
When employees receive their packet, they have a choice to make. They can keep or reject Part B benefits. They can also reject Part A benefits, but only if they’re prepared to withdraw their application for Social Security and pay back all the Social Security benefits they’ve earned to that date.
Employees who aren’t yet eligible for Social Security retirement benefits or who aren’t collecting disability benefits aren’t automatically enrolled in Medicare. To sign up, they’ll need to contact the Social Security Administration. They can sign up online at the Social Security Administration website, call Social Security at 1-800-772-1213, or visit their local Social Security office. Railroad workers should reach out to the Railroad Retirement Board at 1-877-772-5772.
When to apply for Medicare
People who become eligible for Medicare when they turn 65 have a seven-month initial enrollment period. They can sign up three months before they turn 65, and for up to three months after the month when they turn 65. (Note that if their birthday is on the first day of the month, their seven-month period starts four months before they turn 65 and ends two months after the month when they turn 65.)
Some people may also be able to sign up for Part B during a special enrollment period without paying a late enrollment penalty. For example, if an employee has group health plan coverage through their company or through their spouse or partner, they have eight months to sign up after they lose group health plan coverage or stop working, whichever happens first. Certain other limited circumstances may allow for a special enrollment.
There is also a general enrollment period between January 1 and March 31 of every year. If employees sign up during this time, coverage will begin on January 1. If they don’t qualify for a special enrollment period, they may also be subject to a monthly late enrollment penalty.
When an employee gets Medicare, there are separate enrollment periods for Medicare Advantage Plans (Medicare Part C) and Medicare drug plans (Medicare Part D). For example, there’s a seven-month period when employees can sign up—beginning three months before they turn 65, including the month they turn 65, and three months after they turn 65. There’s also an open enrollment period from October 15 to December 7 every year and another Medicare Advantage Open Enrollment Period from January 1 to March 31 every year.
When does Medicare start?
The date when Medicare coverage will start depends on the signup date. Note that Medicare coverage always begins on the first day of the month.
Part A coverage begins the month a beneficiary turns 65. If their birthday is on the first of the month, coverage will begin the prior month.
Part B has more complicated rules for the start of coverage. If a beneficiary signs up before the month when they turn 65, coverage will begin the month when they turn 65. If they sign up during their birth month, coverage will begin the following month. If they sign up a month after their birthday, they’ll wait for two months for coverage to begin. And if they wait two or three months after they turn 65, coverage won’t start for three months.
If Medicare-eligible folks sign up during the general enrollment period, their coverage will begin on July 1. If they qualify for a special enrollment period, their coverage generally will start the month after they sign up.
How does Medicare work with employer health plans?
If an employee plans to work past the age of Medicare eligibility, they’ll want to know about how their company’s health plan works with Medicare and how they can maximize their benefits.
You’ll want to tell them that they can keep their group health plan and take part in Medicare Part A. If you or your client’s company has more than 20 employees, your group health plan will cover their expenses first, and Medicare will cover other expenses. If Medicare-eligible folks want to avoid paying premiums for Part B, they can defer signing up until they stop working or lose their health insurance without paying a late enrollment penalty. They can also sign up for Medicare Part C and Part D on their own.
They’ll also want to consider whether they’d like to continue making contributions to their health savings accounts (HSAs). If your group plan is an employee’s primary coverage, then they may want to delay Medicare enrollment and continue contributing to their HSA. If Medicare is their primary coverage, employees can’t continue contributing to their HSA, or they’ll face a tax penalty. They should stop making HSA contributions at least six months before they enroll.
How to contact Medicare
Now that you’ve provided employees with a basic understanding of when, how, and why to apply for Medicare, you can also help them figure out where to go. To enroll in Medicare, employees should visit https://www.medicare.gov/ to log in or create an account or use the Medicare phone number 1-800-MEDICARE (1-800-633-4227) to talk to someone and get started.
Once a beneficiary has been issued a Medicare card, it’s important to remind them not to share their Medicare number with anyone who contacts them by phone, email, or in person. It’s unique to them and they don’t want that information falling into the wrong hands. If a beneficiary needs to replace or update their Medicare card, they can log into their Medicare account at https://www.medicare.gov/ to request a replacement or print one or call 1-800-MEDICARE.
How ALEX can help
Employees will likely have other questions about how they should plan for retirement. Fortunately, they don’t have to go it alone. ALEX Medicare offers a one-on-one conversation that helps employees learn about Medicare eligibility and enrollment dates, understand Medicare coverage options and cost, and ultimately help them get the right benefits plan for their next chapter.
