by Jason Houghton
Do you remember your first time riding the Sounder Train downtown, or any train? Everyone is trying to get to a certain place, and there are a lot of stops. As you get closer to your destination, you may have found yourself asking, “Is this my stop?” Then, checking your destination and the map to make sure this is, indeed, where you need to get off? It can be stressful and confusing for a first-time rider.
This is how I sometimes think of Medicare. We all have a “stop” that’s right for us, but there are a lot of stops to go through before getting to the right one. There are seminars, webinars, programs, and flowcharts discussing Medicare, but I prefer to keep things simple. In this article, I will cover the basics of Traditional Medicare enrollment.
At the end of the day, there are only two milestones you need to be aware of.
1. You’re approaching the age of Medicare eligibility – 65 years of age.
2. You are already 65+ and retiring soon – leaving your employer-sponsored group medical plan behind.
Naturally, as you punch your transfer ticket into retirement, you’ll want to ensure you have all the information you need to become your own healthcare provider. Taking this first step of enrolling can seem difficult, but I’m here to break down the essentials of signing up and to help you navigate the enrollment process.
With all the dates, enrollment periods, and options, finding an answer to one Medicare question usually creates two more. Medicare has so many features, it is challenging to keep them all straight. Because of this, I highly recommend you work with an independent Medicare broker, such as myself, or another experienced professional in your area. Most of us do not charge for our services, and in my case, I am an independent broker; I can give truly unbiased advice.
Now, let’s get you enrolled in Medicare!
First, it’s all about timing.
If you are preparing to enroll in Medicare when you are first eligible at age 65, you will have an Initial Enrollment Period (IEP). Your IEP gives you seven months to hop on board the Medicare train, starting three months before you turn 65 and lasting three months after. To illustrate, if you turn 65 in September, your IE lasts from June through December. For my more visual learners, below is a graphic.
To ensure seamless coverage and that you “don’t miss the train,” it’s wise to enroll as early as possible within your IEP window. Suppose you want to catch a later train to Medicare. In that case, you may be able to delay enrollment after age 65 if you have health insurance from your current employer (or your spouse’s employer) and the company you work for is considered a “large employer,” meaning they have 20 or more employees.
What are Medicare Part A and Part B?
Medicare Part A, which is also known as “Hospital Insurance,” helps cover inpatient hospital care, skilled nursing facility care, hospice care, and home health care. Most people opt to enroll in Medicare Part A when they turn 65, even if they have health insurance from an employer.
Most people paid at least 40 quarters of Medicare taxes while they worked in the U.S. and, therefore, do not pay a monthly premium for Part A. However, if you’re still working and have to pay a premium for Part A, or if you contribute to a Health Savings Account (HSA) you may want to consider delaying Medicare Part A until a later date.
Medicare Part B, also called “Medical Insurance,” helps cover services from doctors and other health care providers, outpatient care, home health care, durable medical equipment, and some preventative services, including certain vaccines and cancer screenings. As I mentioned above, those working past 65 and with health insurance from their (or their spouse’s) current employer may be able to delay enrolling in Part B.
How much will Part A and Part B cost?
Medicare premiums vary depending on how long you (or your spouse) worked, when you first signed up for Medicare, and your current income. You qualify for the traditional Medicare “Premium-Free Part A” if you meet one of the following criteria:
- You’ve worked at least 40 calendar quarters (about 10 years) in any job where you paid Social Security taxes in the U.S
- You are eligible for Railroad Retirement benefits
- You have a spouse who qualifies for premium-free Part A
If you didn’t pay Medicare taxes long enough (the 40 calendar quarters mentioned above), you can still get Part A, but you may have to pay a monthly premium. This is called “Premium Part A.” Currently, you’ll pay either $278 or $506 each month for Part A, depending on how long you or your spouse worked and paid Medicare taxes.
Everyone pays a monthly premium for traditional Medicare Part B, and the amount can vary. The amount you pay is determined by your modified adjusted gross income (MAGI) as reported on your IRS tax return from 2 years ago. You’ll pay the standard Part B premium plus an income-related monthly adjustment amount if it is above a certain amount.
Some things to note about traditional Medicare Part B
- You can incur a lifelong penalty if you don’t sign up when you first become eligible (your IEP)
- In 2023, most people are paying the standard premium amount of $164.90 per month (medicare.gov)
- You can look at the Income-Related Monthly Adjustment Amount (IRMAA) tables to find what your Part B premiums will be.
Lastly, if you are considering delaying enrollment in Medicare, I think it is prudent to speak with a Medicare professional because there are specific requirements once you become Medicare-eligible, and lifetime penalties can apply if you do not enroll within the required timeframe.
If you are still working and considering delaying Medicare, you should contact your employer’s HR department or union benefits administrator before delaying Part A and B,to find out how your insurance works with Medicare. Your employer coverage may require you to enroll in Part A and B to get your full coverage.
Thank you for joining me on this second chapter of this Medicare series. I want to help you “catch the right train” for your own Medicare journey. If you would like to get a more personalized review of your situation, please get in touch with me at our office here in Burien. We are always working to serve our local community and those throughout the country.
Sunrise Financial Services | Independent Medicare Agent
P: 206-420-8520 F: 206-374-2769