When most people start Medicare, it begins on the 1st day of the month of their 65th Birthday. Of course, this is not what is the best for everyone. Frequently, people are choosing to continue working later into life. What Happens If You Delay Medicare Coverage?
In many cases with group insurance there is no need to start their Medicare Part B coverage. These Medicare Beneficiaries have a few options, and can delay their Part B enrollment with no penalty.
If you do not have creditable coverage and you decide to delay your Part B enrollment, you will have to wait until the General Enrollment Period. The General Enrollment Period starts on January 1st and runs through March 31st.
When you enroll during the General Enrollment Periodyour Part B start date will be July 1st. If you do not have creditable coverage, you will be subject to the Part B late enrollment period.
What is Creditable Coverage
Creditable coverage is defined as coverage that is expected to pay on average as much as the standard Medicare prescription drug coverage. There are a few disclosure requirements:
Written Disclosure
The first disclosure requirement is to provide a written disclosure notice to all Medicare eligible individuals annually who are covered under its prescription drug plan, prior to October 15th each year and at various times as stated in the regulations, including to a Medicare eligible individual when he/she joins the plan.
This disclosure must be provided to Medicare eligible active working individuals and their dependents, Medicare eligible COBRA individuals and their dependents, Medicare eligible disabled individuals covered under your prescription drug plan and any retirees and their dependents.
The Medicare Modernization Act (MMA) imposes a late enrollment penalty on individuals who do not maintain creditable coverage for a period of 63 days or longer following their initial enrollment period for the Medicare prescription drug benefit. Accordingly, this information is essential to an individual’s decision whether to enroll in a Medicare Part D Prescription Drug Plan.
Requirement for Entities
The second disclosure requirement is for entities (private health insurance companies) to complete and submit the Online Disclosure Form to the Centers for Medicare and Medicaid Services to report the creditable coverage status of their prescription drug plan.
The Online Disclosure Form should be completed annually no later than 60 days from the beginning of a plan year (contract year or renewal year), within 30 days after termination of a prescription drug plan, or within 30 days after any change in creditable coverage status. — This requirement does not pertain to the Medicare Beneficiaries for whom entities are receiving the Retiree Drug Subsidy (RDS).
Delaying your coverage in Initial Enrollment Period
Your Initial Enrollment Periodusually starts 3 months prior to the month of your 65th birthday, the month of your birthday (or the month you get your Medicare Part B), and continues for the 3 months after. Most Medicare Beneficiaries will start their Medicare Part B coverage the month of their 65th birthday.
However, some people will procrastinate. When this happens, the result can be a Medicare Beneficiary experiencing a lapse in coverage, that could potentially last for a month or two.
If you enroll before the month you turn 65 your Medicare coveragewill start the 1st of the month of your 65th birthday, unless your birthday is on the first day of the month, in that case it will start the 1st of the month prior to your birth month.
If you were to wait until the month your turn 65, your Part B will start one month after you enroll. If you wait until the month after, your Part B will not start until 2 months after you enroll. Waiting until the 2nd or 3rd month after you turn 65, it won’t start until 3 months after you enroll.
Omission of Medicare Part B Can be Problematic
While not having Medicare Part B coverage for a few months may seem like an insignificant gamble. Saving a few premium dollars is certainly not worth the risk imposed on oneself. If you were to get sick, you would be responsible for 100% of the doctors bills.
I Have Group Coverage, Do I Need to Take Part B
When you have group coverage, depending on several factors, you can delay your Part B coverage without being subjected to a penalty. The predominate question is, “does my group plan qualify as creditable coverage?”. To answer this question you should contact the benefits administrator for your employer.
The benefits administrator will be able to advise if you can stay on your group coverage without needing to enroll in Part B. Remember that some group coverages require you to pick up Part B in order to stay on their coverage.
Penalty
If you delay your Medicare Part B and do not have creditable coverage, coverage that pays on average as much as Original Medicare, you will be subject to a Part B late enrollment penalty.
The Part B late enrollment penalty is equal to 10% for each consecutive twelve months you have been eligible, but elected to delay your enrollment into Medicare Part B. This penalty will continue as long as you have Medicare Part B.
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