Many people look forward to getting that assistance, but there are a few instances where it may not be in your long-term interest to sign up for Medicare when you turn 65. You may want to delay enrolling in both Medicare and Social Security in exchange for building your retirement savings.
Delaying Social Security Can Boost Your Monthly Checks
If you don’t need Social Security because you are still working, delaying those benefits can bump you up to a higher monthly wage category. You could draw more money per money by signing up for it when you are older.
How to Avoid Medicare Late-enrollment Penalties
Medicare takes a different view of when you should enroll. You face a late-enrollment penalty if you sign up in later years unless you delay enrollment because you are still working.
If you are a full-time employee, you are free to delay Medicare enrollment without facing a late-enrollment penalty later. Be sure to confirm that your situation means you won’t get a penalty with Social Security representatives. The Social Security Administration handles Medicare enrollment.
Note that being a full-time employee is different from being self-employed or an independent contractor. To make delaying Medicare work, you need to be a full-time employee with company health benefits like an HSA-qualified group health plan ? not an individual health insurance policy.
How to Preserve Your Health Savings Account Tax Benefits
When you begin receiving Medicare benefits, your Health Savings Account is no longer eligible to accept contributions, whether your employer makes them or you do. However, if you receive Social Security benefits and are not yet on Medicare, you are still allowed to contribute to your HSA, as long as you maintain a qualified high deductible health plan.
Before you make such an important decision, discuss it with your company’s Human Resources personnel and Social Security representatives to be sure you understand the ramifications.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.