(upbeat music) - Welcome to our Medicare Advanced Learning Planning for Medicare When Working. AARP Medicare expert Tricia Sandiego's here to help give you the essential information about what your Medicare options are as you approach age 65 and how Medicare fits in if you or your spouse will continue to work after age 65. So, let's get started with a quick overview of exactly what Medicare is. Now, in case you're not quite familiar with how it works, you can think of Medicare as being made up of four building blocks to cover different aspects of medical care. The first two blocks are Parts A and B. A lot of folks call Parts A and B original Medicare. Part A covers hospital costs. Part B covers outpatient medical services like doctor's visits. You can also add Part D, which is drug coverage, and a supplemental insurance plan known as Medigap. Now, Part C is called Medicare Advantage, and this is when you buy a plan from a private insurance company that bundles all the things covered in Parts A and B, and usually the drug coverage as well. Everyone should take a look at their Medicare options as they get closer and closer to 65. Of course, that's the age when most of us become eligible to enroll in Medicare. It's important to start planning for Medicare even if you don't plan on enrolling in it right away. See, for most people, if you've got employer-based insurance through your job or your spouse's job, you can delay your Medicare enrollment without getting penalties for late enrollment. But that is not the case for everyone. You see, some employers designate Medicare as your primary health coverage when you turn 65, and it is the size of the employer that really decides this. For companies with 20 or more employees, the Medicare law says you can stay on the employer's health plan and enroll in Medicare later without penalties, or you can choose to enroll in Medicare and Medicare serves as your secondary insurance. In that case, you'll have to consider when to buy a Medigap plan. We'll have more on Medigap in a minute. But the law is different for companies with 20 or fewer employees. If you or your spouse's job has less than 20 employees, Medicare pays for services first and your job-based insurance pays second. And if you don't sign up for Part A and Part B, your job-based insurance might not cover the costs for the services you get. You should ask the employer that provides your health insurance if you need to sign up for Part A and Part B when you turn 65. And there is another thing to consider as you get closer to Medicare age, and that's your work credits, or your spouse's, if you are a non-working spouse. How long you've worked determines what you'll pay. You or your spouse need 40 work credits, that's about 10 years of employment, to receive Part A without a monthly premium. If either you or you and your spouse combined do not have enough work credits, you can still enroll in Part A, but you will pay a monthly premium. So, if you're turning 65 soon and you've almost got enough work credits, you may want to think about if you want to work just a little longer to get Part A premium free at no cost, or if you feel financially comfortable paying for Part A. In general, if you have a group health insurance from an employer for which you or your spouse actively works after you turn 65, you can delay enrolling in Medicare without incurring any late penalties. When the employer-tied coverage ends, you're entitled to a special enrollment period of up to eight months to sign up for Medicare. If you do not enroll in Medicare when you're first eligible because you're continuing with your job-based coverage, you get a special enrollment period of eight months after that insurance ends. You will not get hit with late enrollment penalties during this window. Now, people who work for smaller companies need to ask your company in advance whether they will require you to sign up for Medicare. But everyone needs to plan ahead, not just folks in smaller companies. Here's an example. Unlike most other insurance plans, Medicare only ensures individuals, not entire families. So each spouse will need to plan to enroll individually, and most likely at different times. So Tricia, can you tell us more about the Medicare time windows? - Sure, the first timeframe you have to enroll in Medicare is called your Initial Medicare Enrollment Period, or IEP. This is a seven-month period that goes from three months before the month you turn 65 until three months after your birthday. If you don't enroll in Medicare during your IEP because you have employer-based insurance, you can delay enrolling in Medicare and qualify for an eight-month Special Enrollment Period, or SEP, after that coverage ends. If you enroll during that timeframe, you won't get any late enrollment penalties. But there's one exception everyone should be aware of in the SEP window, and that's drug coverage. When you lose your employer-based coverage, you only have about two months, not eight, to sign up for our Part D drug plan without a penalty. The third chance you have to enroll in Medicare is the General Enrollment Period. If you miss your Initial Enrollment and your Special Enrollment windows, you can sign up from January 1st to March 31st every year, but you'll most likely have to pay a late fee. I don't know about you, but I hate paying more for something if I don't have to, so it's best to plan ahead and enroll in Medicare during your Initial or Special Enrollment Periods. And here's another timing consideration that you might not be aware of. Remember when I mentioned that you can buy an optional Medigap plan to work with original Medicare? Well, the time when you buy a Medigap plan really has an impact. These plans are supplemental insurance, so they can help pay for out-of-pocket expenses that Medicare doesn't cover. Like, hospital stays can get expensive if you have original Medicare because it only pays for 80% of your hospital costs, and you've got to pay 20% of that cost. If you have a lengthy hospital stay, you can imagine how 20% could add up to a lot of money. A Medigap plan would help you pay your share of the bill. So a lot of people are interested in Medigap plans, but the catch to Medigap plans is that you've got to buy them within six months of enrolling in Part B. Otherwise, insurance companies can charge you more for a Medigap plan or even deny you a Medigap plan altogether. So if you do decide to enroll in Part B while you're still working, carefully consider if and when you want to buy a Medigap policy. - Wow, we see it over and over again, how important timing is, and that means you have to plan for the future. Now, let me make sure that I understand all these timing issues you just went through. First, you've got three periods to enroll in Medicare, Initial Enrollment, which is around your 65th birthday, Special Enrollment, which is eight months after your job's insurance ends, but only two months for drug coverage, and then there's the General Enrollment Period, which is every year from January through March. You want to enroll in your Initial or Special Enrollment Periods in order to avoid late enrollment penalties and to be eligible for Medigap plans. Trish, did I miss anything? - That's it in a nutshell. - Well, there is one final point I want to share with workers as they start planning for Medicare. You should find out if your current job qualifies you for a special retirement health plan. Not everybody gets help paying for Medicare from an employer after they retire, but some people do. If you're starting to plan out your retirement expenses, you'll want to know if you can get this kind of help. So, Tricia, can you tell us more about these special plans? What's out there? - Yes, I can, Derek. Some employers and unions offer retiree insurance. In that case, Medicare is still your primary insurance and your retiree coverage becomes supplemental insurance. Just make sure that the drug coverage in your retiree plan is at least as good as the coverage in a Part D plan. Federal employees can get extra coverage from the Federal Employees Health Benefits Program. If you're covered by FEHBP, you don't have to join Medicare Part B when you retire. But if you ever want to enroll in Part B later, you then get permanent late penalties. Some people are insured through the Department of Veterans Affairs, or VA. If that's you, then you're not required to enroll in Part B, but the VA recommends it. If you retire from the military, you can enroll in the TriCare for Life program. You must enroll in Medicare Part A and B and TriCare for Life serves as your supplemental insurance and provides prescription drug coverage. - Well, thank you so much for sharing all of that. It's all really helpful information that workers need to keep in mind as they get closer and closer to retirement age. Now, the rules about Medicare and employer-based health insurance can get a little tricky, so if you've got a question that we didn't answer, make sure to use our Your Questions Answered tool. That's what gives you the chance to have your own questions answered by professionals from the Medicare Rights Center. Also, we encourage you to check out AAPR's Medicare Enrollment Guide that includes all the basics and more when it comes to Medicare. Thank you so much for watching. (upbeat music)

Medicare options

Medicare enrollment

Medigap plans

retirement health plans

Medicare time windows