From Kiplinger · · 1m 30s
Avoid Medicare Penalties by Checking Employer Size
Check employer size before delaying Medicare Part B to avoid lifetime penalties.
In brief
Check employer size before delaying Medicare Part B to avoid lifetime penalties. Working past 65 with employer health coverage must confirm if their company has 20+ employees to delay Medicare Part B without penalty. Originally reported by Kiplinger.
Medicare Enrollment Trap
Working past 65 with employer health coverage often misses Medicare Part B enrollment deadlines.
“Most of the expensive mistakes I see in retirement planning as a CFP® are subtle. This one is not.”
The 20-Employee Rule
If your employer has 20+ employees, you can delay Medicare Part B without penalty under a special enrollment period.
“If you work for a larger employer, generally one with 20 or more employees, your group plan can remain your primary coverage”
Small Employer Risk
Small employers may consider Medicare your primary payer even while you're still on the company plan.
“But if you work for a smaller employer, Medicare might be considered your primary payer once you turn 65”
Permanent Penalty
Missing Part B enrollment adds 10% to your premium for each full 12-month period you could have had Part B.
“The Part B penalty adds 10% to your premium for each full 12-month period you could have had Part B but did not”
Lifetime Cost Impact
Delaying Part B for three years adds a 30% monthly premium surcharge indefinitely.
“Delay three years when you should have enrolled, and you're looking at a 30% premium surcharge, every month, indefinitely”
Enrollment Windows
Your initial enrollment period is seven months around your 65th birthday with special enrollment periods for active employer coverage.
“Your initial enrollment period is a seven-month stretch around your 65th birthday: the three months before, your birthday month, and the three months after”
Critical Action Step
Confirm employer size and coverage coordination with Medicare before turning 65.
“Well before you turn 65, find out if your employer has more or fewer than 20 employees and confirm in writing how your plan coordinates with Medicare”
HSA Interaction
Enrolling in Medicare Part A while still contributing to a health savings account ends new HSA contributions.
“If you contribute to a health savings account, enrolling in any part of Medicare, including Part A, ends your ability to make new HSA contributions”
The Trap
This Medicare trap punishes people who weren't careless but were uninformed about enrollment rules.
“What makes this trap so frustrating is that it punishes inaction by people who weren't being careless, they were just uninformed”
Avoidable Mistake
A single phone call to HR can prevent lifetime Medicare penalties for working retirees.
“It's one of the rare retirement mistakes that is completely avoidable with a single phone call”
What Happens Next
Retirees must confirm employer plan interactions with Medicare before their 65th birthday to avoid penalties.
“Spend an afternoon confirming exactly how your employer plan interacts with Medicare, and put the relevant enrollment windows on your calendar”
The one thing
Working past 65 with employer health coverage must confirm if their company has 20+ employees to delay Medicare Part B without penalty.
