My team and I often discuss the issues that we hear first-hand from Medicare beneficiaries. We are fortunate to have a community of Medicare beneficiaries that trust us with their Medicare journey ( and the bumps on the road that come with it). In our community, one question that comes up is what options are available to people who do not qualify for free Medicare part A? If you are reading this, you are likely looking for an answer yourself. Here’s what you can do if you don’t qualify for premium free Part A.
Defining Premium Free Medicare Part A
The reality is, no part of Medicare is free. Though, the reason we talk about premium free Part A is that most Americans pay Medicare payroll, or FICA, Taxes during their working years, providing them the opportunity to enjoy no additional Part A premiums after enrolling in Medicare. You qualify for premium free part A if:
- You are 65 or older ( a few exceptions apply) and you and your spouse have paid FICA for at least 10 years
- You are eligible for Railroad Benefits
- You receive Social Security Disability Income
- After a 24 month waiting period, you are qualified to enroll in Medicare
Free Medicare Part A Through Your Spouse
If you don’t qualify because you did not accumulate the required time in paying FICA, that doesn’t mean you have to pay Part A premiums. If you are married, you may qualify because your spouse has had employment and paid at least 10 years of FICA taxes. Here are a few things to note if you think you qualify through your spouse
- Your spouse who paid Medicare taxes must be at least 62 years old at the time you are 65 years old and are qualified to apply for Medicare
- Your marital status matters
- Married-you must be married for at least 1 year prior to receiving benefits
- Divorced-If you were married for at least 10 years and haven’t remarried, you are eligible through your former spouse.
- Widowed-if you were married for at least 9 months and haven’t remarried, you will be eligible.
Medicare Part B
You have to pay premiums for this benefit regardless of how many years you have paid FICA or whether you paid FICA at all. The premium is $135.50 per month in 2019 and is indexed higher based on income. You can apply for this benefit without applying for Part A. When you do it also entitles you to apply for a Part D prescription drug plan.
Paying Part A out of pocket
If you haven’t met the requirements to get premium free Part A you will have to pay a premium in addition to the Part B premium.
- If you have less than 30 quarters ( or 7 years, 2 months) paying FICA, Part A premiums are $437/month
- If you have at least 30 quarters but not the full 40 quarters paying FICA, Part A premiums are $240/month
What if I don’t sign up for Part A?
If you decide not to sign up for Medicare during your Initial Enrollment Period, you will be subject to late enrollment penalties if you decide to sign up later.
- For Part A, the penalty is 10% of the monthly premium for twice the number of years you wait to enroll. For example, if you waited a year to enroll in Part A, you will pay a penalty for two years. However, once you qualify for Free Part A, the penalty goes away.
- For Part B, the penalty is 10% of the monthly premium for every year you do not sign up. Also you will pay this penalty for your lifetime. For example, if you wait two years before applying your penalty will be 20% of your monthly premium for as long as you have Part B.
- There is an exception to the penalties.
- For Part A and B, you do not have to sign up so long as you have creditable coverage from your employee benefits. When you leave your employer, you have 8 months to sign up for Part A and B without any penalty.
- This is not a true exception, but if you qualify for Full Benefits Medi-Cal, Part B, and in some cases Part A, premiums, including the penalties will paid by Medi-Cal.
A way to avoid the high Part A premiums is to not sign up for it until you accumulate 40 quarters of paying FICA. It would be appropriate to sign up just for Part B during your Initial Enrollment Period to avoid the penalty. When you are enrolled in Part B you can enroll in Part D prescription drug coverage. This options will give you medical coverage, but not Hospitalization coverage.
Another way to avoid the high Part A premiums.
So long as you don’t qualify for free Part A, you are eligible to sign up for Covered California for you health insurance and, if you qualify, receive Premium Tax Credits and/or State Tax Subsidies to help pay for a portion of your premium. This option will give you comprehensive medical coverage.
So, if the out-of-pocket premiums seem big now – they will only grow bigger if you choose not to enroll at the appropriate time or the appropriate plan. Contact our office to discuss your options