Ask Ms. Medicare: Coverage Under Spouse’s Employer

Q. I’m nearly 65 and retired but have excellent health care coverage under my wife’s employer plan. We hope to use this until she retires in 10 years. But if I don’t enroll in Medicare now, will I be penalized when I sign up after her retirement?

A. No, as long as you follow Medicare’s rules. Almost anybody who is retired but has group health coverage from the employer of a spouse who is still working does not need to sign up for Medicare Part B on reaching 65. When your spouse retires—or gets laid off or otherwise loses employer health coverage—you will then be entitled to a special enrollment period to sign up. This period lasts for eight months after employer coverage comes to an end. As long as you enroll in Part B (which covers doctors’ and other outpatient services) during this time frame, you won’t incur a late penalty. You’ll also get a guaranteed right to buy medigap supplemental insurance within six months of enrolling in Part B.

You should probably enroll in Part A (hospital insurance) during your seven-month initial enrollment period around your 65th birthday. It won’t cost you anything—there are no premiums for Part A if you’re entitled to Medicare—but it provides an opportunity to tell Social Security that you’re delaying Part B because you have health coverage under your spouse’s employer plan, and this fact will be recorded in its computer system.

However, there are some exceptions to these general rules that you need to pay attention to:

• Check whether your spouse’s employer plan requires you, as a covered dependent, to enroll in Medicare when you turn 65. Some plans automatically become secondary to Medicare when an enrollee becomes entitled to Medicare—which means that Medicare pays claims first. In this case, if you’re not enrolled in Medicare, you would receive no coverage from the employer plan. (Insurance from small employers with fewer than 20 workers is automatically secondary to Medicare, and so is the military’s Tricare for Life coverage.)

• If the employer insurance is in the form of a high-deductible plan with a health savings account (HSA), you need to think carefully about signing up for Part A. That’s because, under current law, you can’t use an HSA when you’re enrolled in Medicare—and just having Part A, even if you don’t use it, counts as being enrolled. For more information on these rules, see “Ask Ms. Medicare: Can I Have a Health Savings Account as Well as Medicare?”

Also, remember that the key phrase in the general rules is “a spouse who receives health insurance under current employment.” In other words, she or he is still working for the employer that provides the health coverage. So, even if your spouse receives terrific retiree health benefits after ceasing to work, both of you should consider signing up for Medicare (Parts A and B) at that time. You’re not obligated to enroll, of course. But if you don’t, and some years down the line those retiree benefits come to an end for some reason, you would not then be entitled to a special enrollment period.

And what about Medicare prescription drug coverage, Part D? Here the rules are different. As long as you continue to receive “creditable” drug coverage under the employer plan—whether your spouse is still working or retired—you do not need to sign up for a Part D plan. Creditable coverage means that Medicare considers it as good as Part D. The benefits administrator of the employer plan can tell you whether it is or not. If you lose this coverage at some stage, you will then receive a special enrollment period of two months to sign up with a Part D drug plan without incurring a late penalty.

Patricia Barry is a senior editor at the AARP Bulletin.