| Tue, May 26, 2020 @ 09:00 AM

Saving on Medicare When Self Employed

Posted by Medicare Made Clear

Many people today have either started their own business or ventured into the workforce as a freelancer or contractor.  If you’re self-employed and are about to enroll in Medicare, you may not be aware how self-employment impacts your Medicare choices. And in some cases, you could actually gain some tax benefits as a self-employed individual.

Enrolling In Medicare When Self-Employed

When you’re self-employed, you may have your own health coverage or be covered by a spouse’s employer. How you currently get your coverage impacts what you need to do when it comes time to enroll in Medicare.

Self-Employed with Marketplace Coverage

If you’re responsible for your own health insurance such as through a Marketplace plan, you can keep it until your Medicare coverage starts, then you can cancel it without penalty or opt to keep it. If you keep your Marketplace plan, it becomes secondary to Medicare. Be aware that when you get Medicare Part A, you will lose any tax credits. or lower out-of-pocket cost savings the plan.

Because a Marketplace plan doesn’t qualify you to delay Medicare without financial penalty, you will need to enroll in Medicare during your Initial Enrollment Period around age 65. You’ll have a total of seven months to enroll in Medicare Parts A and B as well as Part C, Part D or a Medigap plan. The different parts of Medicare have various costs and cover different things, which you can learn about here.

Self-Employed with Employer Coverage from a Spouse

If you have coverage through a spouse’s employer, you may be able to delay enrolling. In order to do this, the employer will need to have 20 or more employees and creditable drug coverage. Furthermore, you’ll need to find out if the company requires Medicare-eligible dependents to enroll in Medicare at age 65 in order to remain on the employer’s health coverage. If they do, you’ll have to enroll in Medicare during your Initial Enrollment Period – to stay on the employer plan and avoid late enrollment penalties.

You may also decide that you want Medicare and the employer plan. You are allowed to keep both, and the employer health plan will become secondary coverage after Medicare.

Self-employed with Retiree Coverage

Self-employed people with retiree coverage should check with their benefits administrator to understand their retiree plan requirements when it comes to Medicare. The retiree plan becomes secondary coverage once you’re on Medicare. The retiree plan may still continue as the main insurance for a younger spouse and dependents.

Medicare Costs May Be Deductible When You’re Self-Employed 

In 2012, a change to the IRS tax code created the opportunity for certain self-employed people to deduct the total amount they paid for Medicare premiums from their self-employment income. This includes premiums for Medicare Parts A, B, C or D.

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