by Mary Jo Heins, Independent Medicare Insurance Agent and former medical practice manager

August 10, 2021

Physicians are Medicare Insiders when it comes to the workings of Medicare billing, coding and coverages.  We want to become well-versed in Medicare idiosyncrasies via education and research, not billing denials.

Likewise, being educated regarding Medicare enrollment will save us from denials of coverage.  As I’ve guided hundreds of people on their Medicare journey, I’ve found several recurring Medicare idiosyncrasies to be central to the conversation with physicians and other high-income individuals, as well as billing departments.

1. Size of the Employer Group

If an individual is on an employer group health insurance plan with 19 or fewer employees on the plan, Medicare is primary and the employer plan is secondary.

Let’s flesh this out.  A 65-year old sole practitioner (only 6 people on the health insurance plan) could have their health insurance carrier say “Due to the size of your practice, we are secondary.  Medicare is primary.  Oh, you don’t have Medicare?  Well then, we are secondary to you as a self-pay.”  This is the letter of the law though I do not know of specific instances where insurance carriers have taken this hard line.  In any case, why risk the possibility?  Also, Medicare could impose a 10% late enrollment penalty.

2. IRMAA – Medicare Premiums Vary by Income

Income Related Monthly Adjustment Amount.  Medicare Part B and Part D premiums are tied to your Adjusted Gross Income (AGI).  It is a 2-year look back on AGI, which is line 11 of your 1040 income tax return.  AGI includes wages, capital gains and rental income and is significantly higher than taxable income.

Every November, Social Security sends notification of the new year’s premium based on the AGI from your income tax return 2 years prior.

What does this look for high-income individuals?  If your AGI for 2019 was $500k+ on an individual return or $750k+ on a joint return, your Part B premium would be $504.90 per month.  This may be lower than what you are paying for the health insurance premium through your practice if your expenses are allocated against your draw from the practice.

The kicker is Part D, Rx coverage.  The Part D IRMAA for the individual referenced above is $77.10 per month.  So in addition to the Part D insurance premium, which may be only $15-$20 per month, you pay Medicare $77.10, bringing your total Part D “premium” payment to roughly $100 per month.

For individuals on no chronic medications or a few generics, this premium price tag is disconcerting and calls for discussion of alternative strategies.

3. Enrolling in Medicare – Age 65 v When Employment Ends

Medicare spells out three enrollment periods to enter Medicare:

  • Initial Enrollment Period (IEP) (7 months around your 65th birthday)
  • Special Enrollment Period (SEP) (when your employer health insurance ends)
  • General Enrollment Period (1/1 – 3/31 with an effective date of 7/1)

I also include 2 others:

  • IEP when drawing Social Security retirement benefits (you get your enrollment/card automatically and must actively DECLINE if appropriate for your circumstance)
  • 24 months following receipt of Social Security disability benefits (thus accounting for individuals younger than 65 being on Medicare.  Timeframe is shorter for some medical conditions.)

FAQ – Do you have to enroll in Medicare at age 65?  NO.  Presently, more people are continuing their employer coverage and entering Medicare later via a SEP.  Conversely, if an employee has a chronic medical condition, is on an employer’s high deductible health plan and is experiencing significant out of pocket costs, leaving their employer plan and moving to Medicare while still employed may lower their total out of pocket expenses.


Medicare does not view COBRA as employer health insurance, thus it does not qualify for a Special Enrollment Period.  You can be misinformed regarding COBRA when it comes to dependents and their ability to opt into COBRA independent of you as the retiring employee.

For example, if you are 67 and your spouse is 64 and not yet eligible for Medicare, you should enroll in Medicare via a Special Enrollment Period.  Your younger spouse may obtain health insurance coverage by:

  1. Opting into COBRA coverage from your employer,
  2. An individual health insurance plan or;
  3. If working, their own employer’s health insurance coverage.

If you mistakenly choose COBRA coverage and wait to enter Medicare when your spouse turns 65, your only valid enrollment period will be the General Enrollment Period, delaying your effective date until July 1st and incurring a 10% penalty.

Mary Jo Heins is an Independent Medicare Insurance Agent and former medical practice manager.  For 10 years, she has assisted individuals in understanding and enrolling in all aspects of Medicare.

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