HSA Considerations
You can no longer contribute to a Health Savings Account (HSA) once you enroll in Medicare Part A. Click on the link above for more details on HSAs and Medicare.
Enrolling in Medicare
You will be automatically enrolled in Medicare Parts A and B effective after 24 months of SSDI.
Since you are collecting SSDI (Income), you are required to keep your Medicare Part A. You will have the option to keep or return your Medicare Part B. In your circumstances, it is advised that you Keep Part B.
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You will automatically be enrolled in both Medicare Parts A and B. Simply, do nothing to keep Medicare Part B.
Your Roadmap is based on…
- You are under age 65, but qualifying for Medicare due to SSDI
- Your Primary Insured intends to remain ACTIVELY WORKING (at the employer providing your benefits)
- You ARE covered under the group health insurance plan
- The employer providing health insurance has LESS THAN 100 employees
- You ARE contributing to a Health Savings Account (HSA)
Do I need Medicare to have full coverage?
Medicare “Who Pays First” Law states that your Group Health Insurance will become secondary insurance when you are on Medicare due to SSDI since your Group Insurance is through an employer with less than 100 employees.
Will I receive a penalty if I don’t enroll now?
Unsure. Medicare regulations are unclear as to if one will receive a penalty for not enrolling in Medicare Part B if you are receiving Social Security Disability Income and are also covered by a small group health plan (less than 100 employees).
Part A: Is required since you are collecting SSDI.
Part B: You will receive a Part B Late Enrollment Penalty if you do not have creditable coverage.
- Creditable coverage is group health insurance coverage while the Primary Insured is actively working for the employer providing the Group Health Plan.
- Severance, COBRA and/or Retiree Plans are not creditable for avoiding the penalty.
- Those who have Medicare based on disability can enroll later under an SEP if they, their spouse, or their family member is working, and have coverage by an employer or union GHP (with at least 100 employees – also known as a Large GHP) based on that employment. For reference, see heading titled Enrolling with a Special Enrollment Period.
A 10% penalty added for every 12 months you go without creditable coverage. Months need not be consecutive. See Details on how the penalty is calculated.
- The penalty will be assessed on the Base Medicare Premium for as long as you are enrolled in Medicare.
Part D: You will receive a Part D Late Enrollment Penalty if you do not have creditable prescription coverage.
- Creditable prescription coverage is drug coverage that is expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage.
A 1% penalty added for every 1 month you go without creditable prescription coverage. Months need not be consecutive.
- The penalty will be assessed on the Average Medicare Part D Premium for as long as you are enrolled in Medicare Part D.
Penalty Reset: Everything changes when you reach 65. At the end of the month before the month in which you turn 65, you lose your entitlement to Medicare based on disability. At the beginning of the month you turn 65, your entitlement to Medicare based on becoming 65 begins. In other words, you get a second initial enrollment period. At that point the clock is reset, and Medicare coverage begins anew as though you’d never had it before. Any penalties that were assessed will be removed.
What is my deadline to enroll?
Unsure. To be cautious, it is advisable keep your Medicare Part B when it is automatically issued to you (after 24 months of SSDI). Medicare regulations are unclear and it appear that you only have a Special Enrollment Period if your group size is over 100 employees.
Does it make sense to drop my group health plan to enroll in Medicare Supplement Insurance and a Medicare Prescription Plan?
A general rule of thumb is that if your group health plan costs on average less than $150-200/month/person or about $2000-2400/year/person, then your group health plan is more cost effective than Medicare.
- Please add up the premiums, copays, deductibles and coinsurances (everything except Rx cost) of your current group health plan for comparison.
However, if you think you may pay more than that, or you are seeking lower deductibles and copays, then you may want to explore Medicare further.
Please contact us for a Medicare Cost Analysis to help you better evaluate if your Group Health Plan or a Private Medicare Supplement and Medicare Prescription plan is more cost effective.
- If Medicare Secondary coverage is more cost effective than your current plan, you may want to replace your current plan.
- If your employer is paying the premium on your current plan, you may want to approach them to see if they would be willing to reimburse you the amount they are currently paying to your insurance to help you pay for Medicare instead.