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Getting Medicare when you retire

If you (or your spouse) are getting ready to retire, or if you lose your job-based health insurance before you stop working, you have a limited time to sign up for Medicare without penalty. You may want to start thinking about signing up for Medicare a few months before you retire.

5 things to do before signing up for Medicare

  1. Ask the employer or benefits administrator how its retiree coverage works with Medicare. You’ll want to know if your (or your family’s) current benefits will change, if they offer retirement coverage or other supplemental coverage that works with Medicare, and if any drug coverage they offer is creditable drug coverage . Get questions to ask.
  2. Check when your current coverage ends and sign up for Medicare about a month earlier. Signing up for Medicare before your current coverage ends can help you avoid a gap in coverage.
  3. Ask the employer to fill out the employment form. You’ll need this extra form to qualify for a Special Enrollment Period to sign up without penalty.
  4. Find Medicare plans in your area, if you don’t have retiree coverage or if the employer doesn’t offer creditable drug coverage. If you join a Medicare Advantage Plan or Medicare drug plan, coverage starts the first day of the next month.
  5. To avoid a tax penalty, you and your employer should stop contributing to your Health Savings Account (HSA) 6 months before you retire or apply for benefits from Social Security (or the Railroad Retirement Board).
    Why should I stop contributions before I retire?

How does Medicare work with my job-based health insurance when I stop working?

Once you stop working, Medicare will pay first and any retiree coverage or supplemental coverage that works with Medicare will pay second.

You may be able to get COBRA coverage to continue your health insurance through the employer’s plan (usually up to 18 months). If you're eligible for Medicare, you don’t qualify for COBRA coverage without having to pay a premium.

Don’t wait until your COBRA coverage ends to sign up for Part B — Getting COBRA doesn’t extend your limited time to sign up for Medicare.

If you get COBRA:

This happens:

Before you sign up for Medicare

Your COBRA coverage will probably end when you sign up for Medicare. (If you get Medicare because you have End-Stage Renal Disease and your COBRA coverage continues, it will pay first.)

After you sign up for Medicare

COBRA pays after Medicare (unless you have End-Stage Renal Disease).

When & how do I sign up for Medicare?

You can sign up anytime while you (or your spouse) are still working and you have health insurance through that employer. You also have 8 months after you (or your spouse) stop working to sign up.

  • Your 8-month Special Enrollment Period starts when you stop working, even if you choose COBRA or other coverage that’s not Medicare.
  • Your coverage will start the month after Social Security (or the Railroad Retirement Board) gets your completed forms.

To qualify for the Special Enrollment Period, you’ll need to have your employer fill out a Form CMS-L564 (Request for Employment Information). If the employer can’t fill it out, complete Section B of the form as best you can, but don’t sign it. You’ll need to submit proof of job-based health insurance when you sign up. Forms of job-based health insurance proof:

The way you sign up depends on if you already have Part A coverage or if you’re signing up for both Part A and Part B. Get forms and ways to sign up.

Avoid the penalty & gap in coverage
If you miss this 8-month Special Enrollment Period, you’ll have to wait to sign up and go months without coverage. You might also pay a monthly penalty for as long as you have Part B. The penalty goes up the longer you wait to sign up. How much is the Part B late enrollment penalty?

Do I need to get Medicare drug coverage (Part D)?

As long as you have creditable drug coverage , you can wait to join a Medicare drug plan or a Medicare Advantage Plan with drug coverage. If you’re not sure, ask your drug plan if it’s creditable drug coverage.

Each year your plan must tell you if your non-Medicare drug coverage is creditable coverage. Keep this information — you may need it when you’re ready to join a Medicare drug plan. (Don’t send this information to Medicare.)

You can join a plan anytime while you have job-based health insurance, and up to 2 months after you lose that insurance.

If you want Medicare drug coverage to start when your job-based insurance ends, sign up for Medicare and join a plan with Part D coverage before your job-based insurance ends.

Even if you have a Special Enrollment Period to join a plan after you first get Medicare, you might have to pay the Part D late enrollment penalty. To avoid the Part D late enrollment penalty, don’t go 63 days or more in a row without Medicare drug coverage or other creditable drug coverage.

If you:

Do this:

Don’t have any drug coverage when you stop working
  • Join a Medicare drug plan or Medicare Advantage Plan with drug coverage within 2 months of when your job-based drug coverage ends.

Have drug coverage that’s creditable
  • You can wait to get Medicare drug coverage (Part D).
  • If your drug coverage switches to ‘not creditable,’ you’ll have 2 months to join a Medicare drug plan. You won’t get the Part D late enrollment penalty as long as you don’t go more than 63 days without creditable drug coverage.

Have drug coverage that’s not creditable
  • Join a Medicare drug plan or Medicare Advantage Plan with drug coverage within 2 months of when your job-based coverage ends.
  • If your other drug coverage just switched to ‘not creditable,’ you’ll have 2 months to join a Medicare drug plan. You won’t get the Part D late enrollment penalty as long as you don’t go more than 63 days without creditable drug coverage.

 

When can I join a plan or buy a Medigap policy?

If you want to:

You have:

Join a Medicare Advantage Plan or Medicare drug plan

2 months after your job-based insurance ends

If you want Medicare plan coverage to start when your job-based insurance ends, sign up for Medicare and join a plan before your job-based insurance ends.

Buy a Medicare Supplement Insurance (Medigap) policy

6 months after you first get both Part A and Part B (if you’re 65 or older)

Don’t risk losing your retiree coverage. Check before joining a plan.
The employer may offer coverage when you have Medicare, like a supplemental plan, drug coverage, or Medicare Advantage Plan. If they do, ask if you or your family will lose your coverage if you join a plan the employer doesn’t offer.

What do you want to do next?