Medicare rules allow you to delay enrollment in Medicare Part B and/or D when you are covered by an employer group health plan, regardless of the number of covered employees, if your health coverage is based on your or your spouse's current, active employment.
People who delay enrollment in Parts B and D often do so to save money on their monthly premiums. However, it depends on your plan. If your employer plan acts as your primary insurer and has high cost sharing, having Medicare as your secondary insurer may help pay some of your costs.
If, however, your employer plan includes comprehensive medical and prescription drug coverage with low cost sharing, you may decide it's not worth paying the monthly Medicare Part B premium ($115.40 in 2011) or the Part D prescription drug plan premium (which varies by plan). In this case, you may choose to delay enrollment in Parts B and D until you, your spouse or family member stops working or is no longer covered by the employer plan.
Most people do not delay enrolling into Medicare Part A because they receive it free of charge. Generally, if you or your spouse has worked full-time for at least 10 years and earned 40 quarters of Social Security credits, you will not pay a premium for Part A. For more information, see Medicare: An Overview.
Note: If you are younger than age 65 and on Medicare, or you have a dependent or disabled child on Medicare, your Large Group Health Plan (LGHP) benefits may be based on the current, active employment of qualified family members other than a spouse. See the Social Security website for more information.
When to Enroll in Part B if You Delayed Because of Employer Health Coverage
If you delay enrolling in Part B when you are first eligible because you are covered by an employer health plan, you have 8 months to apply for Part B from the date you, your spouse or family member stops working, or the date the Group Health Plan (GHP) or Large Group Health Plan (LGHP) coverage ends — whichever is earlier. This 8-month period is called a Special Enrollment Period (SEP). If you enroll in Medicare Part B during this SEP, you will not be required to pay a late enrollment penalty.
If you do not enroll during this SEP, you won't be able to sign up for Part B until the next General Enrollment Period (GEP), which is from January 1 to March 31 each year. If you wait to sign up during the GEP, your Medicare benefits will not begin until July 1 of that year, and you may be required to pay a late enrollment penalty that will be added to your monthly Part B premium for as long as you are covered. For more information, see If You Delaying Enrolling in Part B.
Note: If you were younger than age 65 when you became eligible for Medicare and incurred a late enrollment penalty for either Part B or D, that penalty will be waived when you turn 65.
When to Enroll in Part D if You Delayed Because of Employer Health Coverage
If you don't enroll in a Part D (prescription drug) plan when you are first eligible because your coverage through an employer GHP or LGHP is creditable, you will only have 63 days to enroll in such a plan after your group benefits end. If you enroll in Medicare Part D within this 63-day period, you will not be required to pay a penalty.
If you do not enroll in a Part D plan during the 63-day period, you can generally only do so during the Annual Election Period (AEP), which is from November 15 to December 31 in 2010, and from October 15 to December 7 starting in 2011. Benefits begin the following January 1. If you wait to sign up during the AEP, you will be charged 1% of the average national premium for Part D plans for each month you delayed enrolling in a plan and didn't have creditable coverage. This penalty will be added to your monthly Part D premium for as long as you are covered. Note: This penalty is waived if you qualify for the Part D Low-Income Subsidy (LIS) program.
If you are covered by COBRA, see COBRA & CalCOBRA Insurance for more information.