According to The Bureau of Labor Statistics, over 10 million seniors 65 years and older were in the workforce in 2020. If you are one of these working seniors and have health insurance through your employer, you might wonder, “Do I need Medicare Part B?”
Medicare is health insurance for citizens 65 years and older and others who qualify earlier due to Social Security disability benefits. Medicare can be tricky to understand, as there are costs, Part B surplus charges, and specific enrollment windows. But, you may be able to delay your Medicare enrollment. Keep reading to find out how!
How you can delay Medicare Part B
You can delay your Medicare Part B enrollment under one circumstance. If you or your spouse are actively working in the U.S. for a large employer with more than 20 employees, you can delay all parts of until you retire or lose active coverage (whichever comes first).
In this case, you will have an 8-month Special Enrollment Period (SEP) to apply for Medicare through the Social Security office. When you apply for Part B, you will submit forms CMS-40B (Part B application) and CMS-L564 (proof of creditable coverage) to the Social Security office.
Now, let’s say your employer has less than 20 employees. If so, you must apply for Parts A and B during your Initial Enrollment Period, or you will be charged a lifelong late enrollment penalty.
How works with employer coverage
If your employer has more than 20 employees and you have their health insurance, you can still enroll in Medicare. If you enroll in Medicare and have large employer insurance, the employer plan will pay as primary, and Medicare will be secondary insurance. But, if your employer has less than 20 employees and you enroll in Medicare, Medicare will be primary, and the employer plan will be secondary.
Please note that you would not want to contribute to a Health Savings Account (HSA) when enrolled in any part of Medicare. If so, the IRS could penalize you.
When do I need to enroll in Part B?
Those not covered by large employer insurance will need to enroll in Medicare during their Initial Enrollment Period (IEP). The IEP is different for every Medicare beneficiary. Your IEP begins three months before your 65th birthday month and ends three months after your birthday month.
You will apply for Medicare through the Social Security office, either online, in person, or over the phone during those seven months.
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How much does Part B cost?
Many beneficiaries are surprised that costs money since they have paid Medicare taxes majority of their lives. If you or your spouse have worked in the U.S. for ten years and paid payroll taxes, Part A will be $0 for you. But, your work history does not determine your Part B premium.
In 2022, the standard Part B premium is $170.10 per month. But, if you are in a high-income tax bracket, you will pay an Income-Related Monthly Adjusted Amount (IRMAA) fee. The Social Security office evaluates your Part B premium based on your modified adjusted gross income reported on your tax returns from two years ago. For example, in 2022, Social Security will look at your 2020 tax returns to determine your premium.
If you made more than $91,000 single or $182,000 jointly in 2020, you would pay an IRMAA fee on top of your monthly premiums. But, let’s say you no longer make the same income you made two years ago. If this is your case, you can file an IRMAA reconsideration.
Part B surplus charges
Part B does not fully cover all healthcare services at 100%. You are still responsible for the Part B deductible, coinsurance, and Part B surplus charges. Part B surplus charges, also known as excess charges, are an additional 15% fee your doctor can charge you if they don’t accept Medicare Assignment. So, before you visit your doctor, ask if they accept Medicare Assignment. You will not pay an extra 15% surplus charge if they do.
With that said, some Medigap plans, such as the popular Plan G, cover that 15% charge and the Part B coinsurance once the deductible has been met.
You can delay Medicares Part B if you are covered by creditable insurance. If you are not covered by large employer insurance, you will need to enroll in Medicare during your Initial Enrollment Period. If you fail to apply for Medicare during those seven months, you will be charged a late enrollment penalty. Do your research ahead of time so you don’t make any mistakes!