While you are eligible to apply for Medicare when you are 65, there are circumstances where you might not want to, particularly if you are working full time for a larger employer or contributing to a health savings account. However, there can be penalties if you don't sign up at the right time, so it is important to know when you can delay signing up for Medicare without facing a penalty.
You can first sign up for Medicare during your Initial Enrollment Period, which is the seven-month period that includes the three months before the month you become eligible (usually age 65), the month you are eligible and three months after the month you become eligible. If you do not sign up for Medicare Part B during this period, your Part B premium may go up 10 percent for each 12-month period that you could have had Part B, but did not take it. Your Medicare Part D premium will increase at least 1 percent for every month you wait. There is an exception to these penalties for some people who are still working.
If you work for an employer with 20 or more employees, you can usually delay signing up for Medicare Part B without penalty because your employer's insurance will be considered the primary insurer. However, if your employer has fewer than 20 employees, you will probably need to sign up for Medicare Part B when you are first eligible or face penalties down the road. Check with your employer to make sure your current insurer will expect Medicare to be your primary insurer.
Note that COBRA coverage does not count as a health insurance plan for Medicare purposes. (For details, click here.) Neither does retiree coverage or VA benefits. Just because you have some type of health insurance doesn't mean you don't have to sign up for Medicare Part B when first eligible. For you to be able to delay taking Part B, your health insurance must be from an employer where you actively work, subject to the 20-employee rule noted above. In any case, before making a decision about Medicare Part B, you should always contact Social Security by dialing 800-772-1213 or visiting your local Social Security office. The Medicare Rights Center has a handy list of Questions to Ask Social Security During Medicaid Enrollment.
If you are working or have other private insurance, you may be able to delay Medicare Part D without a penalty. Beneficiaries are exempt from the penalties if their insurance is at least as good as Medicare's. This is called "creditable coverage. Your insurer should let you know if their coverage will be considered creditable. You may also be able to avoid or delay getting Part D if you enroll in a Medicare Advantage plan that offers prescription drug coverage.
If you are working, you generally can enroll in Medicare Part A, which is free for most people, without consequences. However, if you are contributing to a health savings account (HSA) at work, you cannot sign up for Medicare. This is true even if your employer has fewer than 20 employees. Part A covers institutional care in hospitals and skilled nursing facilities, as well as certain care given by home health agencies and care provided in hospices, so you will need to analyze whether the HSA is worth losing out on the Medicare Part A coverage. If you are already receiving Social Security, you will be automatically enrolled in Part A, so you will have to stop contributing to the HSA.