If I'm on disability but have good employer group health insurance, do I have to take Medicare?

Raven61 asked...

I am 62 years old and on disability. I recently received my Medicare information and it will start in February 2011. I already have good health insurance from my old employer. Do I have to take Medicare now? Will I be enrolled automatically at age 65 if I don't enroll in it now?

Expert Answer

The answer depends on the fact that Medicare does not consider all employer-sponsored insurance the same. If you had employer-sponsored insurance from current employment, there would be no strong reason for you to enroll in and pay for Medicare Part B (enrolling in Part A is free, so there's no reason not to enroll). Your employer-sponsored insurance (for an employer with 20 or more employees) from current work would provide primary health coverage, with Medicare picking up only secondary costs. And there would be no penalty to you if and when you enrolled in Medicare after you stopped working.

But because you are no longer working for the company that provides your health insurance but instead have the insurance as a disability/retirement benefit, there are two major reasons to enroll in Medicare Part B. First, the health plan itself very likely will require you to enroll in Medicare Part B when you become eligible for it (or penalize you heavily if you don't, in the form of extremely high premiums). That's because if you do enroll in Medicare Part B, Medicare will pay its full share of your medical expenses and your disability/retiree health plan will only have to pay the 20 percent of covered amounts that Medicare Part B doesn't pay. Check with the benefits office at your former employer to see if this is the case.

The second important reason to enroll in Medicare Part B when you become eligible for it is that if you don't enroll, your monthly Medicare Part B premium will increase, if and when you do eventually enroll, by 10 percent a year for every year you delay enrolling. Again, this rule applies because the health insurance is no longer based on your current work. The same rules -- about coverage from current employment versus disability/retiree coverage -- will apply when you turn 65. To learn more about how these rules work, see the official Medicare online booklet Medicare and Other Health Benefits: Your Guide to Who Pays First.