While Medicare is not your only health care option after 65, it is definitely the most common. Many Americans qualify for premium-free Part A coverage due to their work history. This makes Medicare the most affordable option in many cases. For these reasons, most people over the age of 65 choose Medicare for their health insurance coverage. If you are no longer receiving health insurance via an employer-provided plan, enrolling in Medicare within your Initial Enrollment Period (IEP) is likely your best option for affordable health coverage.
That being said, there are some special cases and extenuating circumstances that are important to be aware of. If you find yourself in any of the following situations, you may want to consider your other health care options.
I still have employer-based coverage. Do I need to sign up for Medicare?
While you are eligible to sign up for Medicare when you turn 65, if you find yourself in this situation, you have several options. In order to make the best decision, ensure you understand the differences between each of those coverage options. Make these choices carefully as they will impact your health coverage for the rest of your life.
You can keep your employer-based coverage & enroll in Medicare simultaneously.
If this is the path you decide to take, you will be responsible for paying the premiums associated with both forms of coverage.
If you are working for an organization with over 20 employees, your employer plan will be considered your primary payer. This means that your employer plan will be responsible for covering your costs first. In this case, you are probably in a good position to postpone your enrollment in traditional Medicare. Once you retire, you will be eligible for a Special Enrollment Period (SEP.) Enrolling for Medicare while you are still covered by your employer plan can help cover additional services that exceed the coverage limits of your employer plan; however, this does not include deductibles, copays, or other out-of-pocket costs. Unless your employer plan offers subpar coverage, delaying your enrollment in Part B will likely be your most cost-effective option.
If you are working for a smaller employer (with under 20 employees), Medicare will most likely be considered your primary payer. This means Medicare is responsible for covering costs associated with your care first (up to the plan’s coverage limits). The law still allows people working for smaller employers to delay their enrollment for Part B coverage until they retire. However, smaller employer plans are not always comprehensive enough to be considered as “qualifying care”. In Medicare’s eyes, having non-qualifying care is the same as not being covered at all.
This means you would be subject to penalties if you did not enroll for Medicare Part B within your IEP. Another important thing to remember is that coverage provided by smaller employers is usually considered secondary to Medicare. In this case, your employer plan won’t pay for any services that Medicare covers. This would leave you holding the bill. For this reason, most experts would advise people working for smaller employers to enroll for Part B within their Initial Enrollment Period, whether they intend to keep their employer-based coverage or not. When in doubt, you can always schedule an appointment to speak with the HR administrator at your company. In addition to finding out if your employer-based plan is considered qualifying coverage, you should confirm which plan will be considered the primary payer.
You can delay your enrollment in Medicare until you retire and become eligible for a SEP.
As mentioned in the previous section, if you are still receiving coverage from an employer with 20 or more employees, this may be your most cost effective option. In this case, you can safely delay your enrollment in Original Medicare until your retirement.
If your employer-provided coverage is adequate for your specific health needs, it is unlikely that you would even use Medicare. In this case, delaying your enrollment in Part B until your SEP can save you thousands of dollars in premiums.
You can enroll in Medicare and drop your employer-based coverage.
Once you become eligible for Medicare at 65, you are always within your rights to drop your employer-provided coverage. If Medicare offers similar or better coverage at a more affordable price, this may be the right choice for you. If you decide to do this, make sure to compare the benefits offered by each plan. It is unlikely that you will be able to get that employer-provided coverage back at a later date.
I haven’t enrolled for Medicare yet. Can I get an individual private plan instead?
If you haven’t already signed up for Original Medicare, you are eligible to sign up for an individual health plan. It is rare for people who qualify for premium-free Part A to forego Medicare in favor of private plans, which are typically more expensive. However, this option may be more affordable for individuals who would have to pay a premium for Part A coverage. Here are a few things to keep in mind if you are considering this route:
- Many people are automatically signed up for Medicare Part A. Double check your status with Social Security before moving forward.
- If you delay enrolling for Medicare until after your IEP, you will face permanent penalties on your monthly premiums.
I’m already on Medicare. Can I switch to an individual private plan?
It is illegal for private insurance companies to provide an individual health insurance plan to someone who is already receiving benefits from Medicare. If you are already enrolled for Medicare Parts A & B, you will have to drop your Medicare benefits in order to switch to a plan available through the individual market.
If you were receiving premium-free Part A, you will have to drop your social security or Railroad Retirement benefits. You will also have to pay back the benefits you have already received and reimburse Medicare for any costs. Depending on your medical history, this could be a huge (or even an insurmountable) financial commitment.
Making the switch from Medicare to an individual plan may not be worth it. Make sure to do the math beforehand; don’t forget to include the penalties you will pay if you return to Medicare later. It is also likely that the premiums and other costs associated with your individual plan will increase as you age. It is also possible that this coverage will, at some point, become too expensive for you to keep. Those penalties add up fast, and they are permanent. If it’s likely that you’ll find yourself in such a situation, it may be wise to keep your Medicare coverage.
I don’t qualify for Medicare yet. What are my options?
While many people become eligible for Medicare upon turning 65, plenty of people will experience a delay in their eligibility. There are other people who may never become eligible for Medicare.
For example, if you’re a legal immigrant who has yet to live in the United States for the full five years required to qualify, you’ll have to wait until you reach that milestone to enroll. If you’ve been receiving health coverage from your spouse’s employment, but your spouse is retiring before you are eligible for Medicare, you’ll also find yourself falling into one of these coverage cracks.
In these cases, there are some solutions available to get health coverage. However, not all of them are available to everyone. You’ll have to determine your best path forward according to your own circumstances.
Find a job with benefits. (Or keep the job you already have.)
If you or your spouse has access to a job with health benefits, this is your best option. Employers are legally obligated to offer the same benefits to all employees, regardless of their age, health, or pre-existing conditions. This includes spousal coverage.
If you rely on your spouse’s coverage, the best solution is for your spouse to continue working until you become eligible for Medicare. This, of course, is not always possible.
Pay for COBRA temporary insurance.
If you or your spouse loses or leaves your job, you may be entitled to temporary COBRA coverage. The COBRA law allows people to pay their full premiums to continue their health coverage for up to 18 months.
In some cases, spouses and dependents qualify for COBRA coverage even if the former employee does not elect to take it. For example, if your older spouse retires and begins receiving coverage through Medicare, you may still be eligible for their COBRA coverage.
In the case that you leave your job, take COBRA benefits, and then become eligible for Medicare, your COBRA benefits will cease. However, your spouse may still be entitled to them for up to 36 months.
If you were already enrolled in Medicare prior to becoming eligible for COBRA coverage, you do have the option to keep both. However, because COBRA is considered secondary coverage, if you neglect to sign up for Medicare when you become eligible COBRA will not cover your costs.
Purchase an individual plan through the online Marketplace or on the open market.
If you don’t yet or will never qualify for Medicare, you can purchase a health plan through the individual marketplace. Thanks to the Affordable Care Act (also known as Obamacare), health insurance companies cannot discriminate against people based on age or pre-existing conditions. You can find your state’s healthcare exchange here.
It is no secret that the current administration has hopes to repeal the Affordable Care Act; the individual mandate that imposed penalties on Americans who neglected to purchase health coverage has already been terminated. This will likely lead to less young (& assumedly healthy) enrollees in the pool, which will in turn lead to increased premiums for everyone.
Because it is possible that Obamacare will significantly change or be repealed entirely, it is worth considering the possibility of buying individual health coverage on the open market. This is how many people were able to purchase individual health coverage prior to 2014. Before the ACA was passed, it was difficult for people over the age of 50 to buy affordable health insurance because insurance companies were within their legal rights to charge higher premiums based on age or pre-existing conditions.
If the protections against these practices are lifted in a successful repeal of the ACA, it is likely that individuals over the age of 50 will once again find themselves paying expensive premiums that will limit or prevent their access to individual health coverage.
Should you find yourself unable to afford health insurance coverage, you may be able to receive medical care at a community clinic in your area. Some of these clinics provide free or lower cost care on a sliding scale according to your ability to pay. To search for a clinics in your area, you can visit the U.S. Health Resources and Services Administration directory.