No Part A or B!!!
By David S. Edge
Many times, there are well-intentioned Human Resources staff at your company that will give not so good recommendations to their employees who are turning 65.
It will go something like this; your HR staff will tell you “Oh, go ahead and get your Part A of Medicare, it’s free”. They are correct. But here’s what they don’t tell you…
Part A does not coordinate with employer insurance. Meaning you must do the paperwork to get any benefit.
If you are contributing to a Health Savings Plan at work and start your Part A, you can no longer contribute to that HSA (Health Savings Account). And…. if you accidentally do contribute (because no one in HR told you that you could not), any contribution money is now exposed to a penalty and taxes.
Bottom line…if you are still working and covered by an employer health plan and/or have a Health Savings Account, do not sign up for Part A or Part B of Medicare. Now there are a few catches if you decide to keep your employer plan at age 65:
1) There must be more than twenty employees on the employer health plan at work. Otherwise, you will still need to sign up for Part A & B of Medicare.
2) The employer health plan must be “creditable coverage”. This means the employer health plan is as good as Medicare coverage. If the plan is not “creditable coverage”, you will still need to sign up for Part A & B of Medicare. In your employer health plan “Summary of Benefits” booklet, you will find a paragraph on whether the plan is credible or not.
3) What if you don’t sign up for Medicare A & B and the employer plan doesn’t meet the requirements? You will be exposed to a Medicare penalty that accumulates each month that you do not have Medicare A & B, and, once you do start paying the penalty it never goes away, you pay the penalty rest of your life!
4) Now, some folks start their Medicare A & B and get a Medicare Advantage plan or a Medigap and Part D drug plan. Then they decide to go back to work and their new employer has a wonderful employer health plan that would save you some money or has better coverage. You can turn off your Part B of Medicare, cancel your Advantage plan or Medigap and Part D, and enroll in the employer plan (see #1 and #2 to make sure the employer plan qualifies to avoid a penalty). Leave Part A active as it has no monthly premium.
Then at some point in the future, you can re-activate your Part B with no harm, no foul, no penalty, and re-apply for an Advantage or Medigap & Part D.