Entering Medicare after losing your job unexpectedly.
Entering Medicare at 65 can be overwhelming. But what happens if you have delayed your Medicare enrollment because of employer coverage and suddenly find yourself unexpectedly losing your job? This happened to several of my clients recently and each one of them was completely caught off guard. Losing your job unexpectedly is an emotionally draining experience. Entering Medicare without any preparation can feel intimidating and stressful when all you’ve known is employer health coverage. I’m breaking it down for you so it doesn’t seem so confusing.
If you have lost your job unexpectedly and you were covered by a group health plan through your employer, you may be eligible for a special enrollment period to enroll in Medicare. You typically have an 8-month period to sign up for Medicare after your employment or coverage ends without facing a late enrollment penalty. However, there are some caveats to this.
First and foremost, contact a broker in your area that is fully licensed in all parts of Medicare. That means, they can speak with you about how the process works from Original Medicare to Medicare Supplements, Part D Drug plans and Medicare Advantage plans. Work with someone who will guide and advise you through the process, keeping the following in mind.
Do you already have Medicare Part A?
Enrolling in Medicare Part A during your initial enrollment period at 65 can simplify the process. If you already have Part A, you also have a Medicare number, making it easier to apply for Part B. However, if you delayed your Part A enrollment, you’ll need to apply for it as soon as possible. The quickest way is to apply online at SSA.gov, although you can also call or visit a local Social Security office. Keep in mind that there may be long wait times. Once you have applied for Part A, you can move forward with applying for Part B.
The process for applying to Medicare Part B is a bit more complex. If you are applying during a Special Enrollment Period (SEP), you’ll need to fill out and submit two forms: CMS form 40B and CMS form L564. The first form is the Part B application, and the second form validates your previous creditable health coverage. It’s essential to follow the instructions for both forms carefully. If you’ve changed employers since turning 65, you’ll need to gather information from your previous employers as well as your current employer to show your health coverage. Completing these forms on time is critical to avoid penalties, and I suggest not leaving form L564 with your employer. Instead, wait for the completed form, if possible. Once you have both forms completed, you can upload them online or hand-deliver them to a local office. It is best to avoid mailing them since some people reported having their forms lost in the mail or stuck in a lockbox at the Social Security Office.
How large was your employer?
The first step in starting your Medicare enrollment is to determine the number of employees at you or your spouse’s workplace. If there were 20 or more employees, the employer’s health insurance qualifies as creditable coverage for Medicare. The good news is that if you have large employer insurance past 65 and lose coverage, you qualify for a Special Enrollment Period (SEP). This allows you to apply for Medicare right away without waiting for the General Enrollment Period (GEP).
What happens if your employer has under 20 employees?
Many people are surprised to learn that small employer insurance does not count as creditable coverage for Medicare. If your or your spouse’s workplace has less than 20 employees, you won’t qualify for a Special Enrollment Period (SEP) for Medicare. This means you’ll have to wait until the General Enrollment Period (GEP) from January 1st to March 31st to enroll in Medicare. If you lose your coverage in May, you’ll have to wait several months without coverage and could face a late enrollment penalty. When you apply during the GEP, your Medicare benefits won’t take effect until the 1st of the following month after your application. This can be inconvenient and costly, so it’s essential to plan accordingly. For this reason alone, I advise you to meet with a broker before your 65th birthday to determine if Medicare enrollment at 65 would save you from penalties down the road, even if you intend to keep working.
Should I enroll in COBRA?
Enrolling in COBRA after losing your job and before applying for Medicare can provide temporary health insurance coverage while you wait for your Medicare coverage to start. However, cobra can be expensive. At the time you need to make this decision it is important to consider the costs and benefits of each option and to discuss your specific situation with a broker.
What is your Medicare effective date?
Getting Medicare coverage as soon as possible is crucial to avoid any gaps in coverage. On CMS form 40B, you can request a specific effective date in the remarks section. Generally, Social Security honors the requested effective date if you apply before that date. However, if you don’t request a date, Social Security will usually give you an effective date of the 1st of the month after you submit the forms, but it can vary based on the processor and when they receive your documents. Unfortunately, the process is not always consistent, and approval can take several weeks due to long processing times, two months in some cases. It’s not ideal, but it's essential to get your forms in as soon as possible. Even if you receive approval for the date you requested, you may not receive confirmation until after the requested date has passed.
Finding Additional Coverage...
After you have completed the necessary steps to enroll in Medicare Part A and B, you can begin to explore additional Medicare plans that might meet your needs. One option to consider is a Medigap plan, which can provide additional coverage alongside your Original Medicare. It’s important to note that there is a limited window of six months from your Part B effective date to enroll in a Medigap plan with no health questions asked. This is a unique opportunity to carefully consider your options and make an informed decision about your coverage. Many people choose to enroll in a Medigap plan that begins at the same time as their Part B coverage, which can provide peace of mind and more comprehensive coverage right from the start.
Timing is crucial when it comes to enrolling in a Medicare Advantage or Part D drug plans. After you lose your coverage, you have a limited 2-month window to apply for a plan, and it’s important to have your Medicare number ready for the application process. To avoid a lifetime penalty, it’s crucial not to miss this window. Waiting until the Annual Election Period (AEP) from October 15th to December 7th can be inconvenient and delay your coverage. Thus, completing your Medicare application as soon as possible can help you stay on top of the enrollment process and ensure you get the coverage you need.
As with anything related to Medicare, it is important to work with someone local that you can trust! Someone that will take all things into consideration, including your health history and financial situation, and someone who will be a resource for you throughout the year when you have questions. I consider myself to be an adviser and would be happy to answer any questions you may have about the Medicare enrollment process.