Joanne: When you are approaching Medicare eligibility at age 65 and you start receiving hundreds of phone calls and advertisements, it can seem like you will be forced to enroll in Medicare coverage when you are first eligible. But is that really the case for everyone? We will answer that question and more in today's episode

Cameron: But before we start, my name is Cameron Giardini and together with my co-host, Joanne Giardini Russell, we operate Giardini Medicare, which is an independent insurance agency based out of Southeast Michigan. Although we are based in Michigan, we do work virtually over the phone to directly help consumers in about 13 states find the right Medicare coverage for them.

If we do not work in your state, we will connect you with another trusted, independent agent who will be able to help you find the coverage you want. Even if you choose not to work with us, we know that the information in this podcast will help you with a successful and stress-free transition to Medicare.

Joanne: Alright, we're going to do an overview of Medicare eligibility. We'll do a brief overview of why your current coverage will impact you if you need Medicare. And we're going to talk about the reasons why you may need Medicare when you're first eligible. And we're going to talk about reasons why you may not need Medicare when you're first eligible.

We'll also talk about how you determine whether or not you want Medicare coverage. And then we'll also discuss what to know as you approach Medicare eligibility in general. 

Cameron: So first, we have to start, of course, with Medicare eligibility. The question of, do you need Medicare? It typically begins when you are approaching Medicare eligibility for the first time.

So here's just an overview of some general Medicare eligibility guidelines. It is possible to be eligible for Medicare before age 65. This can happen if you are entitled to Social Security Disability. A person who is entitled to monthly Social Security or Railroad Retirement Board benefits on the basis of disability is eligible for Medicare Part A and Part B after receiving disability benefits for 24 months.

Now, it doesn't only have to be due to disability. If you have ALS, which is amyotrophic lateral sclerosis or Lou Gehrig's disease. Individuals with that disease may be entitled to Medicare the first month they are entitled to Social Security or RRB disability cash benefits. In this case, there is no waiting period like what we just talked about with disability without having ALS.

Now another way you can get Medicare under age 65 is if you have end-stage renal disease, which is often called ESRD. According to CMS, individuals are eligible for premium-free Part A and they can get Part B as well if they receive regular dialysis treatments or a kidney transplant, have filed an application for Medicare, and meet different conditions of social security or RRB benefit eligibility.

And we'll just link to those in the show notes since it's a little too much to talk about right now. For everyone else, you're probably going to be eligible for the first time for Medicare at age 65. The vast majority of Medicare beneficiaries will first become eligible for Medicare due to age when they turn 65.

Now this is not to be confused with being age 62, which is when you might be eligible for actual social security retirement benefits. We will link to more specific eligibility guidelines in the show notes, and you can find those as well at our free online course, which is gmedcourse.com. Now for this episode, going forward, we will only be talking about whether or not you need Medicare.

when you're turning 65, since the rules for those under 65 can differ and will be discussed in future episodes. We will link to a Medicare eligibility calculator in the show notes in case you want to look at that in a bit more detail. So if you are eligible for Medicare, you might find yourself asking, doesn't everyone need Medicare when you turn 65? And Joanne's going to answer that.  

Joanne: And this is actually, I told Cameron, this is one of my favorite topics because does everyone need Medicare at age 65? The answer is a resounding no. Not everyone, although it would make this episode much shorter and much easier if that was the case. But the main reason we wanted to make this episode is because as you approach Medicare eligibility, everyone talks about enrollment timelines, penalties, Medicare Advantage, Medigap.

But the first and the most important question that you need to ask yourself is, Do I need or want Medicare? For the most part, most people will become eligible like we talked about when they turned age 65. However, becoming eligible for Medicare is not the same thing as having to enroll in Medicare.

So this is why one of the most important questions and the first questions we start with when talking to a new client is, do you actually need Medicare to begin when you're first eligible? It seems pretty basic, but it's a really, really important question. So to go along with this episode, in the show notes, we're going to link to an awesome guide that is published directly by CMS, which is the Centers for Medicare and Medicaid Services, it really can help you decide whether or not to enroll into Medicare at age 65.

And lastly, we of course always recommend consulting with an independent broker to help assess your specific situation to see when you may expect to enroll. into Medicare. 

Cameron: Yeah, and that guide Joanne talked about, it's, I think it's literally called the decision guide. 

Joanne: The headline, says deciding whether or not to enroll into Medicare at age 65.

And I point out to people, if it says whether or not that doesn't sound mandatory, does 

Cameron: it? Yep, and we'll go into that of course in more detail. So just an overview of why you may or may not need Medicare when you are eligible. So whether or not you will need Medicare when you are first eligible at age 65, it really all comes down to whether you can delay Medicare coverage without lifetime penalties or claims issues.

Based on your current health insurance coverage. Now. Generally speaking, your ability to delay Medicare past age 65. It will come down to whether or not you are covered by employer group health coverage through active employment of either yourself or a spouse employer size will also impact this decision and we will discuss those details more in a little bit.

Just remember that determining whether or not you need Medicare, is just the first part of the overall Medicare journey. So whether or not you decide you need Medicare, make sure to listen to our other podcast episodes. Now we will go through some more specific examples of different health insurance coverages and how they can impact the do you need Medicare question.

So if you get your health insurance from the following coverage sources and you are turning 65 or getting closer to turning 65, you will likely need to enroll in both Medicare Part A and Part B when you are first eligible at age 65. Of course, this is not an all-inclusive list. It is impossible to cover everything in this episode.

 Make sure to consult with an independent broker, like always. Again, this is basically, if you have one of these coverages, the answer to whether or not you do need Medicare is probably going to lean more towards "yes" than it will "no". Some of these coverages include ACA, that's the Affordable Care Act or marketplace coverage, or other non-marketplace individual health insurance plans.

So again, that's basically health insurance, not through an employer or a group health plan. This can also include Christian or religious health share plans. Again, this also applies to nonreligious ones. It also applies to retiree health coverage from a former employer or union. Although that is employer coverage.

It's not the same as active employer coverage, which is a really important distinction. Cobra is also a reason you will probably need both part A and part B when you're eligible. We have a separate episode totally about Cobra and Medicare. So go listen to that for more details. Also, if you have active employer group health coverage.

But it's from a company with less than 20 employees. That is also a reason you'll probably want to have both Part A and Part B when you're eligible at age 65. If you have no health insurance, obviously that is also a reason you'll want to have Medicare or you'll probably need to have Medicare. And then just a unique situation or a fun fact, active employer coverage.

I know we said that is one way to avoid Medicare. However, it does not count if it is through a domestic partner if you're age 65 or older. So that is the fun fact, I guess, for this episode, if you want to call it that. Right. We've seen it a few times. And we have run into it. Yeah, exactly. We sure have. 

Joanne: So now let's talk about some reasons why you might not need Medicare when you're first eligible.

If you're covered by active employer coverage through yourself or your spouse, and if you're age 65 plus, and then the employer has 20 or more employees, that's a situation where you certainly can defer Medicare. You will often hear about the 20-employee threshold in general terms, but like always, we want to give you all of the details.

CMS says this requirement is met if an employer has 20 or more full-time and or part-time employees for each working day in each of 20 or more calendar weeks in the current or preceding year. Although, obviously that's a mouthful, right? So asking your employer to confirm whether they are primary or secondary to Medicare is absolutely the easiest method.

Your employer may not know, but their group broker, whoever's handling the group insurance plan for the employer should certainly know the answer to that. So why is meeting this coverage criteria so important? Well, if you have active employer coverage through yourself or a spouse, that's the key to avoiding the dreaded lifetime Part B penalty if you delay Medicare past age 65.

So the employer size is what's going to dictate whether or not Medicare or your employer coverage is primary coverage. When you're 65 plus, and eligible for Medicare. Small employer coverage with less than 20 employees becomes secondary coverage to Medicare. So if you don't have Medicare in place as proper primary coverage, it can really lead to large medical bills and denied claims if you need care or treatment.

And we have seen that happen a number of times. Page four of the CMS guide that we're linking to that we discussed in the show notes specifically mentions that you should enroll in Part A and Part B of Medicare if you are covered by an active employer plan with fewer than 20 employees. Some small employers may make exceptions for who pays as primary coverage, but no matter what your employer size is, it's really good to check with them to confirm who will be primary or secondary when you become eligible for Medicare.

It never hurts to ask. And we do suggest getting that in writing, okay? Because they need to sign off that their carrier will allow them to be the primary in that case.

Cameron: And just to recap real quick, what Joanne was saying, basically when it comes to employer size. It, all comes down to who pays primary or secondary.

So that 20-employee threshold is going to be a dramatically different situation if it's below 20 or over 20 when it comes to primary versus secondary coverage. So it's really important to figure that out, especially if you plan on delaying Medicare past age 65.  

Joanne: And what we should just discuss this real quick second is what it means in reality to you. So if you had back surgery. And this had happened to somebody that we, had come across. And she did not have Medicare set up and she was eligible in the month that she had this back surgery and very, very expensive back surgery. She ended up getting a bill for $80,000. And this was because the insurance company that she thought everything was fine with they are able to go back and legally they're entitled to do so and say, well, Hey, you should have been on Medicare.

They would have paid 80 percent had you been insured with them as primary coverage. You don't have that in place. So guess who gets the bill?

Cameron: So just know that it's a real thing. Yeah. Unfortunately, it's one of those things where. It's more likely to be caught if it's a big claim or a big issue. If you're pretty healthy and you never are using your insurance, there's probably not much of an incentive for the insurance company to go back and audit things.

So just keep that in mind. It's probably going to be either a large claim or nothing. So we have had people that are healthy and say, you know, I haven't, I haven't had an issue since I haven't had Medicare as my primary coverage. And really what it comes down to is they just have not. experience to it where the insurance company caught what was going on.

Unfortunately, it tends to happen. Insurance companies want to save money when they see big claims, so that is probably when they'll catch it. So what if you don't need Medicare, but you might still want it? After what we've discussed, if you realize you meet the criteria of not needing Medicare due to proper active employer coverage, that certainly doesn't mean you don't want it or that you can't enroll in Medicare when you are eligible.

All it means is that you may have some more options than some of your other peers who have to have Medicare. So at this point, determining whether you may still want Medicare, it's going to come down to your specific insurance coverage preferences. And it's going to come down to the math when comparing your current employer's health insurance to Medicare options.

So you have to compare your employer health insurance premium and coverage to Medicare options. For example, in 2024, the base part B Medicare premium is 174.70/month. This does not include any other coverage like Medicare Advantage, Medigap, or Part D which is just the base premium for Part B.

So if your employer health insurance, costs you maybe $50/month, all of a sudden, the equation will be much different than if you are paying $300/month for your employer insurance. So again, what you're paying for your employer coverage will greatly impact what you are actually going to do as far as if you want Medicare.

If you have a friend at a different company paying a different price, they will have to do separate math and separate equations to figure out which one makes sense. And by equations, I usually just mean adding up the premiums and the coverages. Another thing to consider when it comes to employer coverage versus Medicare coverage is the pre-tax versus post-tax way that you pay for premiums.

Employer health insurance premiums are often deducted on a pre-tax basis. So according to peoplekeep.com, a pre-tax medical premium, it's a health insurance premium that is deducted from your paycheck before Any income taxes or payroll taxes are withheld and then it's paid to the insurance company.

So this can potentially save you a little bit of money on income and payroll taxes. So keep that in mind when you're comparing Medicare to employer premiums, it's not necessarily apples to apples of, you know, a hundred dollars versus a hundred dollars. Also, if you have a high income, this can greatly impact the equation.

Remember if you are a high-income earner, you may pay more for your Medicare Part B premiums due to Irma. This can make your Part B higher than the $174.70/month that we talked about. This can even get as high as $594/month in 2024, so you can tell that it would have a big difference in what makes sense for you going forward.

Also, you have to consider other unique... situations when comparing your employer's health insurance to Medicare. Do you have dependents on your plan? That is a huge question. And do they rely on you for coverage? Are you contributing to an HSA that you want to continue to do so? And HSAs are health savings accounts.

For example, if your spouse or children are relying on you for their health insurance coverage? Make sure you consider that they will have to pay for other coverage if you choose to leave your current coverage for Medicare. It might be through COBRA, or it might have to be on their own, but many times this is what causes people to stick with employer coverage because they realize that their family's pricing will go up greatly if they leave their employer coverage for Medicare.

Also, compare the employer out-of-pocket costs versus Medicare options. Monthly premiums are typically only half the battle when it comes to comparing employer health insurance versus Medicare. Make sure to also compare the out-of-pocket costs like medical and prescription drug coverage. Many times, employer health insurance has quote-unquote stronger prescription coverage compared to Medicare Part D and Medicare Advantage plans.

But this equation might be changing as Medicare is actually implementing a $2,000 cap on prescription costs in 2025. Now those are going to be for covered prescriptions based on different plans. So it might not work in your favor still, if your employer coverage is strong, but just know that this equation or these details are changing a little bit, or I would say a lot actually in 2025, don't forget medical costs and your medical needs as well.

For example, if you have a $5,000 deductible that you meet every year, so you're actually paying $5,000 with your employer plan, it might be much different than a plan with a low deductible and a low cap on spending like Medigap or with Medicare. So keep that in mind as well. We have even created an online form that you can use to compare employer coverage to Medicare coverage to get a better idea of what might be right for you.

You can find this in the show notes or find it by signing up again for our free online course at gmedcourse.com. Just keep in mind that the form can't tell you exactly what to do. It's just more of a quick guide. So let's wrap it up and talk about what should you do as you're approaching age 65. 

Joanne: So, number one, if you need or you want Medicare when you're first eligible at age 65, a couple of things.

If you're drawing Social Security benefits for at least four months before you turn 65, you will automatically be enrolled into Medicare Part A and Part B as you approach that 65th birthday. If you are not drawing Social Security benefits for at least 4 months before turning 65, you will have to be proactive and go enroll in both Parts A and B of Medicare before you turn 65.

We always recommend applying online using ssa.gov, but make sure to listen to our other podcast episodes to learn about how these methods will work in more detail. Don't forget that if you enroll in Original Medicare, which is again Part A and Part B, At age 65, you will also want to decide if you want Medicare Advantage or Medigap coverage at the same time.

Number two, if you don't need and you don't want Medicare when you're first eligible, you need to figure out if you want to delay both Part A Part A, and Part B, or you just want to delay Part B. A couple of things can help you there. If you plan on contributing to a health savings account past age 65, you will likely want to delay both Part A and Part B of Medicare.

Make sure you go listen to our HSA episode for more information about that. Otherwise, if you are not contributing to an HSA, it is very likely that you will want to enroll in the premium-free Part A coverage when you are first eligible to do so. If you are drawing Social Security benefits, and this is very important, this is where people kind of glitch up, as we mentioned before, if you're collecting Social Security, you're going to be automatically enrolled into both Part A and Part B.

If you want to defer Part B, make sure, make sure, make sure, make sure you follow the instructions in your Welcome Packet, and it will show you exactly what to do to send the card back, sign, defer Part B, and then you go get it later when you finally need Part B or want it. 

Cameron: So, as you can see, when you're approaching Medicare eligibility at age 65, it can be easy to get caught up in the frenzy of applying for Medicare and trying to determine whether or not you want Medicare Advantage or a Medigap plan.

But make sure that first, you just take a quick step back and a deep breath and take time to answer the important question, do I even need Medicare? As always, please leave us a review on your podcast app and subscribe so you can listen to future episodes. You can also find more Medicare content from us by going to YouTube or TikTok and searching gr dini Medicare.

Lastly, if you have any questions or feedback for this episode, you can send us an email at info@gmedicareteam.com or schedule an appointment with one of our agents at gmedicareteam.com. Thank you for listening and have a great day.