If you’ve passed your 64th birthday it’s time to plan your Medicare enrollment. What you need to do (and it may be nothing) before you’re 65 depends on whether you’re currently working or currently receiving Social Security retirement or disability benefits.1
What is Medicare Part B?
While Medicare Part A covers hospital bills, Medicare Part B covers outpatient medical services. These include visits to healthcare providers, ambulance services,2 and supplies, such as walkers and infusion pumps.3 Medicare Part B covers 80% of the cost of approved services and supplies.
Medicare Parts A and B do not cover long-term care, most dental care, glasses, hearing aids, dentures, routine foot care, acupuncture or cosmetic surgery. 4
How Much Does Medicare Part B Cost?
There is a monthly premium for both Medicare Part A and Medicare Part B. However, most people don’t have to pay a Part A premium because they paid Medicare taxes while working. All enrollees, however, pay a monthly Part B premium, and the premium amount may depend upon your income.5 If you need assistance affording Part B premiums, there are federal and state programs that can help.6
Income-Adjusted Premium (IRMAA)
About 7% of beneficiaries will pay a higher Part B premium due to the Medicare Income-Related Monthly Adjustment Amount (IRMAA).7 If your individual income is $87,000 or more, or joint income is $174,000 or more, you will be charged a higher Part B premium. Income-adjusted premiums range from $202.40 to $491.60 a month, depending on income.
Standard Premium for 2020
If your income is less than $87,000 for an individual or $174,000 for a joint tax return, you pay the standard premium. The standard part B premium for 2020 is $144.60 a month,8 usually deducted from your Social Security check if you are receiving benefits.
When Can You Enroll in Medicare Part B?
If you are eligible for Medicare (you can check here), you can sign up for Part B in the months surrounding your 65th birthday. If you sign up in the three months prior to your 65th birthday, your Part B benefits will start the first day of the month you turn 65. If you delay signing up without having creditable insurance coverage in the interim, the penalties can be quite costly and long-lasting.
When is the Initial Enrollment Period?
The seven-month Initial Enrollment Period begins three months before the month you turn 65 and ends three months after. If you wait until your birthday or longer, this could cause a gap in coverage.9
Some people are automatically enrolled in Medicare. If you are receiving benefits from Social Security or Railroad Retirement Board for at least four months before you turn 65, enrollment will occur automatically within a month of your turning 65. You should receive a red, white and blue Medicare card in the mail three months before your birthday. An exception is Puerto Rico, where Part A enrollment is automatic, but you need to sign up for Part B.
People who receive disability benefits from Social Security or Railroad Retirement Board for 24 months will automatically receive Medicare Part A and Part B. They do not need to wait until they turn 65.10
When is the General Enrollment Period?
If you didn’t sign up for Medicare when you were first eligible, and don’t qualify for special enrollment, you can sign up during the General Enrollment Period. This period is from January 1 to March 31 each year. Your coverage will start on July 1. You may have to pay a higher premium for missing the Initial Enrollment Period.
How Do You Qualify for a Special Enrollment Period to Enroll in Medicare Part B?
You may be able to postpone signing up for Medicare Part B at age 65 without penalty. This applies if you or your spouse is working and have a group health plan through your employer or union. After the health insurance based on that employment ends, you can sign up for Part B during an eight-month special enrollment period. COBRA and retiree health plans are not considered coverage based on current employment.
Can You Delay Signing Up for Medicare Part B?
You may pay a penalty later on if you don’t sign up for Medicare when you are first eligible when you turn 65. You can delay signing up for Medicare Part B without penalty, however, if you have health insurance through an employer with more than 20 employees. If you have health insurance from an employer with fewer than 20 employees, you need to sign up for Medicare when you are first eligible because the employer has no legal obligation to offer health insurance to an employee or spouse who is eligible for Medicare.11 Check here to see whether or not you need to sign up for Part B as soon as you’re eligible.
What is the Medicare Part B Late Enrollment Penalty?
If you don’t sign up for Medicare Part B when you are first eligible, you may be subject to a penalty. The penalty is a 10% increase in your monthly premium for every year you delay signing up. The penalty stays in place for as long as you have Part B. 12
How Can You Avoid Paying the Medicare Part B Late Enrollment Penalty?
If you sign up for Medicare Part B during the seven months surrounding your 65th birthday, you can avoid paying a late enrollment penalty. If you or your spouse continues working past 65 and has health coverage through the employer, you will not be penalized for signing up once that coverage ends. However, the rules can be complex so check here to see if your coverage will be acceptable.
What is Creditable Coverage?
The term “creditable” means that insurance coverage meets a minimum set of standards. Most group, individual and government-provided plans meet these qualifications. Even if you have creditable coverage, you will pay a penalty for delaying signing up for Medicare Part B for more than twelve months, if the coverage is not from an employer.
Medicare Part B provides comprehensive insurance coverage for doctor visits and procedures, durable medical equipment and a variety of other services. Once you’ve signed up for Part B and are also enrolled in Part A, you may choose to enroll in a Medicare Advantage Plan, which often includes prescription drug insurance. Or you can stay with Original Medicare and purchase a Part D plan and a Medigap (supplemental) policy to help pay for the 20% of approved costs and other cost-sharing.