Eligibility

When an employee turns 65, they have a 7-month period that begins 3 months before the month you turn 65 to sign up for Medicare.  This is known as your Initial Enrollment Period (IEP)

If you are 65 or older and are covered under an employer group health plan, you can decide to wait until your employer group coverage ends to enroll in Medicare Part A and/or Part B.  This is called a Special Enrollment Period (SEP) and you have an 8-month period that starts once you stop working or 60 days from the day your employer group coverage ends (whichever happens first) to enroll.

If you miss your Initial Enrollment Period (IEP) or your Special Enrollment Period (SEP), you get another chance to enroll.  This is known as a General Enrollment Period (GEP).  You can sign up for Medicare Parts A & B between January 1 and March 31 each year.  Your Medicare coverage would begin on July 1 of that same year.

Choices at Age 65 and Still Working

• Enroll in Medicare Part A and/or Part B while you are covered under an employer group health plan. Medicare and employer group health coverage will need to coordinate benefits.  The employer group health plan will pay first or be “Primary” and Medicare will be pay second or be “Secondary”.
• Drop your employer group health plan and enroll in Medicare Part A and Part B as your Primary coverage. You will also need to sign up for a Medicare Part D plan for Rx coverage or choose a Part C plan (Medicare Advantage) which includes Rx coverage.
• Stay with the employer group health plan and apply for Medicare later. If you wish to continue contributions to an HSA account, be sure to delay enrollment in Part A, which is automatic at age 65.

Coverage

Part A (Hospital Insurance)

• Inpatient care in hospitals
• Skilled nursing facility care
• Hospice care
• Home health care

If you have worked at least 10 years (40 quarters) under Medicare-covered employment and paid Medicare taxes during that time, you qualify for premium-free Medicare Part A.   If your spouse has enough employment quarters, they can also qualify for premium-free Medicare Part A based on his or her work history.  Medicare Part A will automatically start when you turn 65 if you have received Social Security Benefits or Railroad Retirement Benefits for at least 4 months prior to your 65^th birthday.  Otherwise, you will have to manually enroll in Part A benefits.

If you don’t have enough work history to get Medicare Part A without paying a premium, you can decide to delay enrollment if you already have health coverage through an employer. 

Part B (Medical Insurance)

• Services from doctors and other health care providers
• Outpatient care
• Home health care
• Durable medical equipment
• Many preventive services

Medicare Part B always comes with a monthly premium, so you may choose to delay enrollment if you or your spouse are still working and have employer group health coverage.  Medicare Part B will automatically start when you turn 65 if you have received Social Security Benefits or Railroad Retirement Benefits for at least 4 months prior to your 65^th birthday.  Otherwise, you will have to manually enroll in Part B benefits.  But if you don’t sign up for Medicare Part B when you are first eligible and don’t have other coverage based on current employment, you could have to pay a late-enrollment penalty later when you do enroll.

Part D (Prescription Drug Coverage)

• Cost of prescription drugs

Shiloh’s Rx coverage under our PPO1, PPO2 and PPO3 plan has been determined to be creditable with respect to Medicare Part D coverage for Plan Year 2020.   This means that on average, these three plans are expected to pay out as much as standard Medicare prescription drug coverage pays.  Because these coverages are creditable, you can keep this coverage and not pay a higher premium (a penalty) if you later decide to join a Medicare drug plan.

COBRA

If you choose COBRA after you stop working, do not wait until your COBRA coverage ends to sign up for Medicare.  If you delay enrolling in Medicare Part A and/or Part B after your Special Enrollment Period ends, you will have to wait until the next General Enrollment Period (January 1 to March 31 every year) to enroll and you may have to pay a late-enrollment penalty.

When you are 65 or older and elect COBRA, coordination of COBRA and Medicare switches with Medicare becoming Primary coverage and COBRA secondary coverage.   This switch happens even if you have not signed up for Medicare – meaning that COBRA coverage will only cover on a secondary basis.

Health Savings Accounts

Health Savings Accounts (HSAs) are accounts for individuals with a high-deductible health plan.   Funds contributed to an HSA (both employee and employer) are not taxed when put into the HSA or when taken out as long as they are used to pay for qualified medical expenses.

If you have an HSA and will soon be eligible for Medicare, it is important to understand how enrolling in Medicare will affect your HSA.

If you enroll in Medicare Part A and/or Part B, you or your employer can no longer contribute pre-tax dollars to your Health Savings Account.  This is because to contribute pre-tax dollars to an HSA you cannot have any health insurance other than a high-deductible health plan.  You may continue to withdraw money from your HSA after you enroll in Medicare to help pay for medical expenses such as deductibles, premiums, copayments and coinsurance.  If you use the account for qualified medical expenses, the funds will continue to be tax-free.

If you choose to delay Medicare enrollment because you are still working and want to continue contributing to your HSA, you must also wait to collect Social Security retirement benefits.  This is because most individuals who are collecting Social Security benefits when they become eligible for Medicare are automatically enrolled into Medicare Part A.   You cannot decline Part A while collecting Social Security benefits.

If you decide to delay enrolling in Medicare, make sure to stop contributing to your HSA at least six months before you do plan to enroll in Medicare.  This is because when you enroll in Social Security, you receive up to six months of retroactive Medicare coverage, not going back farther than your initial month of eligibility.  If you do not stop HSA contributions at least six months before Social Security enrollment, you may incur a tax penalty.

Additional Resources

Medicare – 1-800-MEDICARE (1-800-633-4227)  www.medicare.gov
Health Equity – 1-866-346-5800
Cigna – 1-800-244-6224

This webpage is for informational purposes only and does not constitute a Summary Plan Description or Plan Document.   All Medicare rules and regulations are the final authority and supersedes any incorrect or misstated information on this page.