Medicare Prescription Drug Coverage For Dummies
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Why should you delay Medicare Part B? When you’re covered by health insurance at work (whether from your own or your spouse’s employer) as well as Medicare, that insurance is automatically primary to Medicare unless the employer has fewer than 20 workers.

Primary means the employer plan pays your medical bills first; Medicare kicks in only in the event that your plan doesn’t cover a service or item that Medicare covers. (Make no mistake: Medicare doesn’t cover any out-of-pocket costs, such as deductibles and co-payments, that the employer insurance requires.)

So unless your employer plan provides lousy coverage — and of course that can certainly happen — you probably wouldn’t use Medicare at all. So why would you want to pay monthly premiums for it?

That’s really what this special enrollment period is all about. It allows you to postpone Part B — and the monthly premiums it requires — if you want to, without risking late penalties. But only in certain circumstances. Here's how you can be sure whether these circumstances apply to you.

“For whom you or your spouse still actively works”

This part is the key phrase. It doesn’t matter whether you or your spouse is working full time or part time for the company or organization that provides you with health insurance. But you or your spouse must be in what government officials call “current employment” for you to be able to delay Part B enrollment and become entitled to a special enrollment period later on.

The Social Security Administration (which handles Medicare enrollment and doles out Part B late penalties) is very strict about this rule, so let me be very clear: Current employment doesn’t include any time when the only health insurance you receive from an employer comes in the form of retiree or COBRA coverage — because, by definition, you’re not actively working when receiving these benefits.

Also, it means that you must be working for the same employer that provides this health insurance. If you still work beyond 65 and have health benefits — but these benefits come from an employer you or your spouse no longer works for — you aren’t entitled to delay Part B without penalty.

“That employer has 20 or more employees”

Small employers’ workforces are often much more fluid than larger ones. Especially in seasonal jobs, workers come and go, so companies may have more than 20 employees at some times of the year and fewer at other times. Also, some small employers band together with others to buy health insurance in groups, with the result that, collectively, the pool of workers eligible for health benefits is a lot greater than 20.

Broadly, employers meet the “20 or more” rule for Part B purposes if they have at least 20 full-time, part-time, or leased workers on the payroll for 20 or more weeks in the current or preceding year. These workers don’t all have to be enrolled in the employer’s health plan; the total number of workers employed is what counts. Employers also meet the rule if they participate in some kinds of multiemployer health insurance programs.

Even if you work for an employer with fewer than 20 employees, the law still allows you to delay Part B and get a SEP when you retire.

However, be warned: Small employer plans are usually secondary to Medicare, and in that case, they won’t pay for any services that Medicare covers. In this situation, if you don’t sign up for Part B during your IEP, it’d be the same as having no insurance at all. So if you have health coverage from a small employer, be sure to find out in advance whether Medicare will become your primary coverage when you turn 65.

Still, one obscure rule is worth knowing: If you fail to sign up during your IEP and then realize that your employer plan isn’t paying because it’s become secondary to Medicare, you’re entitled to an immediate SEP to sign up for Parts A and B without penalty at any time while you’re still working. Your coverage begins on the first day of the month after you enroll.

Definitions can be quite complex and depend on the situation. So if you work for a small employer but aren’t sure whether the size of your company or organization meets the “20 or more” rule, consult your employer. Failing that, you can also call the Medicare Coordination of Benefits Contractor at 800-999-1118 (TTY 800-318-8782).

“Until this employment or the health coverage ends (whichever comes first)”

This wording underscores the rule about needing to actively work for the employer that provides health insurance as a condition for delaying Part B. After the employment ends — even if the coverage continues — you need to enroll in Part B to avoid penalties.

Many people think of “employer coverage” as any type of health benefits that come directly or indirectly from their jobs. After all, retiree and COBRA benefits are usually provided by the same insurance company that covers an employee while working: same name, same card, and (at least in the case of COBRA) exactly the same coverage.

But when it comes to delaying Part B, neither type of benefit counts as employer coverage. Too many people fall into this trap, often with serious consequences.

In some circumstances, employer coverage comes to an end before the employment actually ends. So keep in mind that the Part B late penalty clock starts ticking when the job ends or when the insurance is terminated — whichever happens first.

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