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As government-sponsored health insurance for people age 65 or older, Medicare should be easy to understand. Unfortunately, that is not the case. Below are key findings from a 2021 Medicare literacy survey:
- 75% of Medicare beneficiaries have described the Medicare program as “confusing and difficult to understand”;
- The annual Medicare enrollment period (AEP) is unknown to more than 50% of its beneficiaries;
- The earliest date available to sign up for Medicare was unknown to 80% of Medicare beneficiaries;
Continue reading to develop a deeper understanding of medicare enrollment dates and if Medicare is actually mandatory at 65.
Is Medicare mandatory?
Medicare is not required and is not mandatory for anyone. Despite this fact, it is automatically offered and applied to some individuals. The Centers for Medicare & Medicaid Services operates Medicare, but Social Security processes all new Medicare enrollments. Individuals who are receiving Social Security benefits prior to their 65th birthday will automatically be enrolled in Medicare Parts A & B. This will automatically happen during their 65th birthday month.
If receiving Social Security benefits, you will receive sign-up instructions 3 months prior to your 65th birthday.
Do you have to sign up for Medicare at 65 if you are still working?
If you are 65 and still working you are not mandatorily obligated to sign-up for Medicare. However, there are actually many benefits to getting on Medicare at 65, even if you don’t plan to retire yet. According to Medicare, the chart below outlines how you would benefit from signing up for Medicare Part A & B while still working.
| If You Are Still Working | Job Coverage as it Relates to Medicare Part A & B |
| Your job (spouse’s job, if covered under their insurance) has less than 20 employees. | If you have both job-based insurance and Medicare, your Medicare would pay for services first, followed by your job-based insurance. Your job-based insurance may not cover you for services rendered if you do not have Medicare Part A and Part B. Make sure to have a discussion with your employer prior to your 65th birthday. This will allow you to understand your job-based insurance requirements relating to Medicare. |
| Your job ( spouse’s job, covered under their insurance) has more than 20 employees. | If you have both job-based insurance and Medicare, your job-based insurance would pay for services first, followed by your Medicare insurance. Medicare Part A: You can decide to sign up for coverage at the age of 65 or anytime afterward. Medicare Part B: Qualifying life events such as stopping working or losing your job-based insurance, allow you to sign up without a penalty after the age of 65. |
| You or your spouse receive a stipend from your employer to buy your own health insurance OR You or your spouse are still working, but do not have health insurance through that job. | Medicare will not usually work as a co-insurance in this instance. Once you sign up, Medicare pays first. If you are eligible for Medicare, with or without being covered, private insurance companies have the ability to lower the amounts they pay or not pay at all. Make sure to have a discussion with your insurance company and employer prior to your 65th birthday. This will allow you to best understand requirements relating to Medicare. |
When to sign up for Medicare if still working?
When you’re still working, there are different timelines for when you should sign-up for Medicare Part A and Medicare Part B.
Medicare Part A:
If you’re still working at 65 and want to take advantage of Medicare, you are able to sign up for Part A at a few different points without a penalty:
- You are able to sign up 3 months prior to turning 65 years old;
- You are able to sign up when you turn 65 years old;
- You are able to sign up any time after your 65th birthday;
Medicare Part B:
If you’re still working at 65 and want to take advantage of Medicare, you are able to sign up for Part B at two different points:
- You are able to sign up during your first eligibility period without penalty. This period starts 3 months prior to your 65th birthday month and extends 3 months after it.
- You are able to sign up after your initial eligibility period by paying a late enrollment fee. For each enrollment period ( 12-month time frame) you wait to sign-up will cost you an additional 10% penalty. You will be responsible for this penalty every time you pay your Medicare premium for the length of your coverage.
Medicare offers the below example to help understand how the Part B penalty works:
- Your 1st Medicare enrollment period ended in December of 2016.
- You declined enrollment until July 1st of 2019.
- During this time, you declined 2 full 12-month enrollment periods.
- You will be responsible for a penalty of 20% of the standard premium.
Negative consequences for not signing up for Medicare at 65
As we’ve discussed throughout this article, Medicare is not mandatory. However, there is really no upside in declining or opting out of Medicare coverage. The opposite is in fact true. There can be monumental negative consequences in opting out of Medicare.
Medicare Part A
Social security benefits and Medicare Part A correlate with each other. While you can decline Medicare Part A coverage, this will inadvertently stop your Social Security benefits or RRB benefits. Declining Medicare Part A coverage actually goes a step further regarding Social Security benefits. If you decline Medicare Part A, you will be held responsible for paying back all the monetary Social Security benefits you have received thus far.
Medicare Part B
If you decide to opt out of Medicare Part B, you are condemning yourself to pay a higher rate in the future. If you decide to sign-up for Medicare Part B after your eligibility period, you will incur a 10% penalty for each eligibility year you did not have the coverage. This penalty will be paid each and every time you have to pay your premium.
While still working
If you are still working and have job-based insurance you want to contact your company before or during your Medicare eligibility period. Many insurances require their beneficiaries to also have Medicare once they are eligible. Not adhering to this requirement may result in higher insurance premiums, more out-of-pocket health costs, and/or a drop in your current insurance policy.
