What about Medicare’s prescription drug benefit?Today, more Americans are working well past 65, the age of eligibility for Medicare.If you are approaching your 65th birthday, and retirement isn’t on the horizon, here’s what you need to know about signing up for Medicare while still working.Under current rules, if your employer has 20 or more employees, you don’t have to enroll in Medicare if you don’t want to.Your employer’s group plan is the primary payer, which means they pay first on any healthcare bills you have.You can delay enrollment into Medicare until you retire and stop actively working.If you work for a smaller company with fewer than 20 employees, you must sign up for Medicare as soon as you are eligible.With small companies, Medicare is the primary payer.If you don’t sign up, but stick with your group plan, the group plan can refuse to pay your claims.Even worse, when you do finally sign up for Medicare, you’ll be faced with late enrollment penalties.If you are still working and have a good health insurance through your employer, you don’t have to sign up for Medicare at age 65 and there will not be a penalty if you follow the rules (see below).According to a Medicare spokesperson, as long as you have earned 40 work credits of Social Security, “you can sign up for Medicare Part A or B any time you want” without a penalty provided you meet both of the following conditions: a) you or your spouse are still working and b) you or your spouse are covered by a health insurance plan offered through an employer or a union.Once you leave your job and are no longer covered by a group plan, you have eight months to choose your Medicare coverage.This is called your “Special Enrollment Period” and it’s an eight-month window that begins either the day after your employment ends or the day your work-based insurance coverage ends, whichever date is earlier.If you don’t sign up within your Special Enrollment Period, that’s when you could be subject to a penalty.According to the Social Security Administration, your “monthly premium will increase 10% for each 12-month period” during which you were eligible but did not enroll.Keep in mind that there are no premiums for Medicare Part A, which covers treatment provided in a hospital, a skilled nursing facility and hospice care.That’s because you have been pre-paying for this coverage each year of your working life via the Medicare tax that is deducted from every paycheck.While Part A coverage won’t go up in cost if you miss your Special Enrollment Period, other forms of Medicare coverage will, such as Part B (doctor visits) and Part D (prescription drugs).In addition, both of these options are means-tested.If your income is below a certain amount, you may qualify for assistance in paying these premiums.On the other hand, if your income exceeds certain thresholds, you might have to pay more.If you’re thinking about delaying your enrollment in Medicare, keep in mind that there are enrollment windows that apply.After your initial enrollment window ends, you can only sign up for Medicare Part A and B during the general annual enrollment period from January 1–March 31, with coverage effective July 1.And you can sign up for Part D during the annual enrollment period from October 15–December 7, with coverage effective January 1 of the coming year.So if you delay your enrollment, you could be paying higher premiums when you eventually do enroll, and you’ll have to wait until an open enrollment period in order to have access to coverage.If you’re only enrolled in Part A, for example, and you get diagnosed with a serious illness in April, you’ll have to wait until the following January to have Part D coverage, and until the following July—more than a year in the future—to have Part B coverage.Although Medigap plans don’t have late enrollment penalties, insurers in most states are allowed to use medical underwriting if you apply for a Medigap plan after your initial enrollment window (when you’re first eligible for Medicare) ends.This means they can charge higher premiums or reject the application altogether if your medical history doesn’t meet their requirements.There is no annual open enrollment window for Medigap plans, so unless you’re in one of a handful of states that have guaranteed-issue rules for Medigap plans, you might be unable to purchase Medigap coverage if you don’t do so during your initial enrollment period when coverage is guaranteed-issue.When you start depending on Medicare, you will not be able to count on it for all your medical needs.Full Medicare covers only about half of your medical expenses.So as you plan for retirement, you will need to shop for supplemental insurance that picks up where Medicare leaves off.There are two types: Medigap insurance and Medicare Advantage plans.They differ in what they charge, what they cover, and whether they apply to your community, or cover your medicines, your doctors and the places where you might travel.Also, realize that your income impacts what you will be charged for Medicare and the taxes you pay on Social Security.So financial planners suggest that people examine their savings a few years before retiring to ensure that during retirement they have a blend of IRA and Roth IRA plans.Roth IRAs don’t get taxed in retirement and IRAs are taxed.So by plucking a little money from each of the two plans for expenses each year, retirees can keep their taxes down and hold on to more of their Social Security and Medicare benefits than they would if they didn’t consider tax implications.We want to be sure that you feel comfortable and have all the knowledge you need prior to enrolling in a Medicare plan.
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