Medicare Coverage After Losing Insurance

Your Medicare Initial Enrollment Period lasts for seven months. CMS says it covers the month of your 65^th birthday, the three months before, and the three months after. People who qualify for Medicare due to disability also receive an Initial Enrollment Period, which covers the seven months surrounding the 25^th month of disability payments.

You can also enroll in Medicare during the General Enrollment Period, which runs from January 1 to March 31 every year. In addition, some people qualify for Special Enrollment Periods based on their individual circumstances – for example, if you lose job-based health insurance.

If you don’t enroll in Medicare when you become eligible, you may face expensive late enrollment penalties. However, you may be able to avoid these penalties if you had qualifying job-based coverage. According to Medicare.gov, the penalties are as follows:

• Medicare Part A Late Enrollment Penalty: Your monthly premiums increase by 10% for twice the number of years you didn’t sign up. For example, if you delayed signing up for three years, you’ll have to pay the penalty for six years.
• Medicare Part B Late Enrollment Penalty: Your monthly premiums increase by 10% for each year you could have signed up but didn’t. For example, if you delay signing up for two full years, you’ll pay a 20% late penalty.
• Medicare Part D Late Enrollment Penalty: You’ll pay 1% more each month if you didn’t join a Medicare drug plan when you signed up for Medicare or if you went 63 days without creditable drug coverage.

To avoid these expensive late enrollment penalties, you need to sign up as soon as you’re eligible – unless you qualify for an exception. According to Medicare.gov, if you have health insurance from your job or your spouse’s job, you can wait until you stop working or lose health insurance to enroll in Medicare Part B and won’t incur a late enrollment penalty. However, you need to be careful – some private health plans don’t pay or pay less if you qualify for Medicare, and not all prescription drug plans are considered creditable.

If you’re thinking about delaying enrollment, talk to your health insurance sponsor to make sure you’ll qualify for penalty-free late enrollment and find out whether your prescription drug plan offers creditable drug coverage under Medicare rules.

Also note that you can decide to enroll in Medicare even if you have employer-based coverage. However, you might not want to pay for Medicare Part B if you have coverage already. In addition, Medicare coverage will disqualify you from contributing to an HSA, even if you just have Medicare Part A coverage.

If your job-based health insurance ends, you will have an opportunity to enroll in Medicare. According to Medicare.gov, your special enrollment period ends eight months after your group health plan coverage ends or your employment ends, whichever happens first. (Note that COBRA does NOT count as a group health plan.)

You can also enroll in a Medicare Advantage, Part D, or Supplement Insurance plan. According to Medicare.gov, you’ll have two months after your job-based insurance ends to join a Medicare Advantage or prescription drug plan. If you want a Medicare Supplement Insurance (Medigap) policy, you’ll have a six-month Medigap Open Enrollment Period after you enroll in both Medicare Part A and B.

If you miss your Special Enrollment Period, you may have to wait until the next General Enrollment Period. This runs from January 1 to March 31 every year. Late enrollment can lead to coverage gaps and late enrollment penalties.

If your job-based coverage ends before your Medicare coverage begins, you will be responsible for any health expenses you incur during the coverage gap. To avoid this, make sure your coverage is continuous.

• Don’t wait until your coverage has ended. Medicare.gov says you can sign up for Medicare and pick a plan before your job-based insurance ends if you want coverage to start when your job-based coverage ends.
• Understand that Medicare coverage won’t start immediately. Coverage typically starts on the first of the month after you sign up. This means if you sign up on May 5, your coverage won’t start until June 1. If you sign up during your Initial Enrollment Period before you turn 65, coverage will start during the month you turn 65.

If you decide to retire before you turn 65 or are laid off before your 65^th birthday, you won’t qualify for Medicare. You will need to wait until the Initial Enrollment Period around your 65^th birthday. In the meantime, you have several coverage options, including private health plans you purchase on your own, a health plan you purchase on the Healthcare.gov Marketplace, or your state Marketplace and COBRA continuation coverage.

If you are receiving Social Security benefits for at least four months before you turn 65 and live in the U.S. (but not Puerto Rico), you should be signed up for Medicare Part A and Medicare Part B automatically when you turn 65. If this does not apply, you’ll need to sign up.

To sign up for Medicare, contact the Social Security Administration. You can go to your local Social Security Administration office, call 1-800-772-1213 (TTY: 1-800-325-0778), or go to https://www.ssa.gov/medicare/sign-up.

You can also enroll in a Medicare Advantage, Part D, or Insurance Supplement Plan. Receive guidance from an agent or search and compare plans on your own.