The Medicare Part B Special Enrollment Period

When you first enroll in Medicare, you enroll in Original Medicare, which is made up of Part A and Part B. Because Medicare Part A is free for most Americans, it makes sense for most people to enroll in it as soon as they can—unless they plan to continue contributing to an HSA. Medicare Part B, however, comes with a monthly premium. As a result, many people choose to delay Part B enrollment if they’re still working or receiving insurance coverage from another source.

Delaying Part B enrollment can result in late enrollment penalties if you aren’t eligible for the Part B Special Enrollment Period (SEP). In this article, we’ll explain how eligibility works, when the Part B Special Enrollment Period occurs, and what else you should do after you enroll in Part B. 

Key Takeaways:

• The Part B Special Enrollment Period is intended for individuals who want to stay on their employer insurance coverage rather than switching to Medicare when they turn 65.

• You should compare your current insurance coverage with Medicare before choosing to delay Part B enrollment.

• Make sure you’re eligible for the Part B Special Enrollment Period before you choose to delay Part B enrollment or you may incur a late enrollment penalty.

What is the Part B Special Enrollment Period?

The Part B Special Enrollment Period allows those who plan to continue working after 65 to stay on their employer coverage without facing late enrollment penalties later on. ‍

Those who aren’t eligible for the Part B Special Enrollment Period and choose to not enroll in Medicare Part B during their Initial Enrollment Period are likely to face the Part B late enrollment penalty when they do eventually sign up. 

Who is eligible for the Part B Special Enrollment Period?

You’re eligible for the Part B Special Enrollment Period if you choose to continue working for and receiving insurance coverage from a large group employer after turning 65 years old. A large group employer is any employer with 20 or more employees. 

Many people who work for small group employers are surprised to learn that they are not entitled to the Part B Special Enrollment Period. Instead, when they choose to delay Part B enrollment, they become responsible for a lifetime Part B late enrollment penalty. (Small group employers have 19 or fewer employees.)

Should you use the Part B Special Enrollment Period?

If you work at a company with less than 20 employees, then you are not eligible for the Part B Special Enrollment Period and should enroll during your Initial Enrollment Period (a seven-month window that starts three months before the month you turn 65). 

If you work at a company with 20 or more employers, then you should compare your employer coverage to Medicare. Three things to keep in mind are:

• How much your employer takes from your paycheck for healthcare premiums

• Coverage for your spouse or any dependents (there’s no Medicare family plan!)

• How much you like your current coverage, including the deductible, out-of-pocket maximum amount, and network

• You cannot contribute to an HSA while on Medicare Part A or Part B

Many people are surprised that Medicare often provides better value than employer coverage. Original Medicare has an incredibly low deductible: only $226 for 2023. Meanwhile, employer coverage often has a deductible of $1,500 or more! 

If you need help comparing your employer coverage to Medicare or making the best decision for your unique situation, we’re here to help! Schedule a free consultation or call us at (855) 900-2427 to get your questions answered and feel confident in your Medicare decisions.

When is the Part B Special Enrollment Period?

The Part B Special Enrollment Period doesn’t occur at a particular time during the calendar year. ‍This SEP starts three months before and lasts for eight months after you lose or end employer-based coverage. 

What do you need to do for the Part B Special Enrollment Period?

To ensure you qualify for the Part B SEP, there are a few things you should do when you're still working and when you decide you want to leave your employer coverage.

Keep proof of creditable prescription coverage

If you delay Part B enrollment, you’ll also delay Medicare Part D (prescription drug) enrollment and should maintain proof of creditable coverage from your employer. Any employer offering health coverage must send a letter every fall to Medicare-eligible employees. This letter will state if the employer’s group prescription coverage meets Medicare’s creditable coverage standard.

Obtain a CMS-L564 form

To qualify for the Special Enrollment Period, you and your employer must provide a one-page document: Form CMS-L564 to Social Security. The form is straightforward and your Human Resources department should be familiar with it. 

Notify Social Security early

We recommend notifying Social Security that you want to enroll in Medicare because there may be a delay between when your active work coverage ends and your Medicare coverage starts. 

Stop contributing to your HSA

It’s important to know that if you haven’t started Medicare Part A already, then your Part A benefits will be backdated six months from the date of your Medicare application. This is particularly important for anyone contributing to an HSA because you need to discontinue HSA contributions before your Medicare Part A coverage begins.

What to do after enrolling in Part B

Once you’re enrolled in both Part A and Part B, you should consider additional Medicare insurance options to be sure you’re getting the most value from Medicare. You can choose to replace Original Medicare with a Medicare Advantage plan. You can also choose to stay on Original Medicare and add a Medicare Supplement (also called Medigap) and/or prescription drug plan. 

Enrolling in Medicare Advantage after delaying Part B

Enrolling in Medicare Advantage is a little different if you delay Part B enrollment. You’ll need to select a Medicare Advantage plan during your Initial Coverage Election Period, which begins three months before your Part B coverage takes effect. 

If you miss enrollment during your Initial Coverage Election Period, then you can enroll in a Medicare Advantage plan during the annual Open Enrollment Period. The Medicare Open Enrollment Period lasts from October 15 - December 7 each year. 

Enrolling in a Medigap plan after delaying Part B

The best time to enroll in a Medigap plan is during the Medigap Open Enrollment Period. During this time, you are guaranteed acceptance into any Medigap plan you choose, and insurance carriers cannot ask questions about your health history. Your Medigap Open Enrollment Period lasts for six months after your Part B coverage becomes effective. 

If you enroll in a Medicare Advantage plan during your first year on Medicare, you are also guaranteed issue for Medigap plans through a “trial right.” You can read more about Medigap enrollment and guaranteed issue periods here.

Enrolling in a Part D plan after delaying Part B

Enrolling in a Part D (prescription drug) plan is a little different if you delay Part B enrollment. You’ll need to select a drug plan during your Initial Coverage Election Period, which begins three months before your Part B coverage takes effect. 

If you miss enrollment during your Initial Coverage Election Period, then you can enroll in a prescription drug plan during the annual Open Enrollment Period. The Medicare Open Enrollment Period lasts from October 15 - December 7 each year. 

If you have any questions about the Part B Special Enrollment Period or other aspects of Medicare enrollment, our team of licensed, independent Advisors can help. We can help with any questions on costs, as well as on avoiding or minimizing gaps in coverage, Medigap waiting periods for pre-existing conditions, and potential penalties.

Schedule a free consultation or call us at (855) 900-2427 to get your questions answered and feel confident in your Medicare decisions.