Seniors may apply for Medicare just prior to turning 65 years old.  Medicare Part A covers hospitalization, while Medicare Part B covers outpatient care, such as doctor visits, x-rays and tests. Part D covers prescription drugs. 
 
There are some circumstances in which seniors may want to delay applying for Medicare. These cases include when a senior works full-time for a large employer or when a senior contributes to a Health Savings Account (HSA). However, there are also penalties for seniors who do not apply at the right time. 
 
This article explores the importance of knowing when to apply for Medicare without facing a penalty.
 
Medicare’s initial enrollment period is comprised of seven months: three months prior to turning age 65; the month a senior turns 65; and the three months after turning 65. If a senior misses the seven-month window, Medicare enrollment is available only at limited times during the year and there may be penalties for late enrollment. Generally, seniors who do not apply for Medicare could face penalties. However, if a senior works full-time, the senior may avoid those penalties. 
 
For Part B, when a senior is an active-duty military member or works full-time for an employer with 20 or more employees, the senior can delay applying for Medicare Part B because the employer’s insurance will be viewed as the primary insurer. Under this scenario, the employer’s insurance pays first and Medicare pays second. A senior who leaves that employment has eight months to apply for Part B coverage before penalties are assessed.
 
If the employer has fewer than 20 employees, the senior risks penalties for delaying applications for Medicare Part B.  Failure to apply for Part B during the initial period face premium increases of up to 10 percent for each one-year period that Part B could have been elected. A senior should consult the employer to determine the primary insurer and follow up with a local Social Security office with other questions. Receiving COBRA, retiree insurance and veterans’ benefits will not exempt seniors from Part B penalties.
 
If a senior is working or has other private health insurance, the senior can delay applying for Medicare Part D for prescription drug coverage. Generally, other private coverage must be considered “creditable coverage” under Medicare rules. An employer will know whether its health coverage is “creditable.” Failure to timely apply for Part D coverage could result in a penalty of a monthly one percent premium increase. 
 
Part A covers hospital costs and is premium-free if a senior or the senior’s spouse paid Medicare taxes for at least 10 years. A senior can apply for this coverage without risk of penalties unless that senior is also contributing to an HSA. Because Part A covers costs of hospitalization and nursing home care, seniors should analyze whether the contributions to the HSA are worth forgoing the coverage offered by Part A. 
 
If a senior is already receiving Social Security benefits before age 65, that senior will be automatically enrolled in Medicare Part A and Part B at age 65. Seniors should consult an elder law attorney or a local Social Security office with case-specific questions.

Andrew Olsen is an attorney in the CSH Law Elder Law Practice Group in Wilmington, NC, where he practices in the areas of elder law, estate planning probate, guardianship, alternative dispute resolution, estate and trust litigation, special needs planning and veteran’s benefits. To contact Olsen, call (910) 777-5733 or email him at [email protected].