Why Are the Rules for Enrolling in Medicare So Confusing When You’re Self-Employed?

Dear Toni,

I’m self-employed with an individual health plan and confused about enrolling in Medicare when I turn 65 in July. I cannot find the answer to my situation in the Medicare & You handbook. A business associate who is also self-employed delayed his Part B because he is covered by his wife’s company health benefits. He’s sure that I can delay enrolling in Medicare, since I am covered by a health insurance plan.

Can you please explain the difference, if there is one, between my situation and my friend’s? As I’m sure you can imagine, I don’t want to make a Medicare mistake.

Thanks, Toni,

Greg from Corpus Christi, TX

Hi Greg,

This is a great Medicare question! If you’re an American turning 65, telemarketers have undoubtedly started bombarding you and pelting you with confusing “turning-65” Medicare rules. Fortunately, that’s why I’m here! Allow me to clear up your confusion.

Recently, I consulted with a 66-year-old gentleman who, like you, was self-employed. Unfortunately, someone gave him the wrong information about delaying his Medicare Part B. He was surprised to discover that Medicare does not recognize individual plans as “true employer” health benefits to delay Part B. Qualifying group health plans are defined in the Medicare & You Handbook as companies with 20+ employees.

The information regarding health insurance is found on page 20 of the 2025 Medicare & You handbook under “Health Insurance Marketplace.” It states the following: “You should sign up for Medicare when you’re first eligible to avoid the risk of a delay in Medicare coverage and the possibility of a Medicare late enrollment penalty.”

This gentleman is 66 and will receive not just a 10% penalty due to not enrolling in Part B during his Initial Enrollment Period—his penalty will be 20% (2 years, 65 and 66) each month for the rest of his Medicare life. The 20% penalty usually goes up as the Part B premium usually goes up every January 1st. 

How to Avoid the Dreaded Part B Penalty!

Greg, I would recommend that you enroll in Medicare during your “Initial Enrollment Period,” which begins 3 months before July, so that your Medicare begins July 1st. You currently have an individual health insurance plan, not a “true group” employer health insurance plan, which can cause you to receive a Medicare penalty if you do not enroll in Medicare at the right time.

To enroll in Medicare properly…

• Go online to www.ssa.gov/medicare/signup to apply for Medicare within the 3-month period before turning 65 or up to 90 days after.
• Click “Apply Online.”
• Make sure you have the following information available: your date and place of birth, MEDICAID number, marriage and divorce stats (including the name or current or prior spouse, your spouse’s date of birth and SSN; beginning and ending dates of your marriage; and the place and date where you were married)!

But isn’t Medicare automatic?

Many Americans believe that Medicare is automatic when turning 65, like the government switches a magical switch and poof—you’re enrolled in Medicare. This is correct if you’re receiving your Social Security check when turning 65. Not working full-time with “true employer” benefits is what Social Security (the government agency that enrolls those applying for Medicare) searches for when administering the 10% per year penalty for Medicare Part B.

Why can my business associate delay enrolling in Medicare?

Your business associate, who is covered under his working spouse’s “true employer” group health benefits, can delay enrolling in Medicare. He must follow Medicare’s enrollment rules, as Social Security dictates upon losing those benefits.

Do you have Individual Health Insurance?

• Working full-time or contract labor with individual health insurance should enroll in Medicare Parts A, B, and D when turning 65 to avoid a Medicare Part B and D penalty.
• Note: Medicare does NOT recognize individual health plans as “creditable coverage.”

Do you have Qualified Employer Benefits and Work Full-Time?

• Medicare allows you to delay your Medicare Parts A and/or B if you or your spouse is working full-time with employer benefits, not retirement benefits, and you are covered by that specific employer’s benefits.
• IMPORTANT! “Is still working” are Medicare’s buzzwords for delaying your Medicare Part B.
• To enroll in Medicare after turning 65 and having delayed Medicare Part B due to working full-time with employer benefits, complete Social Security forms CMS-L564 “Request for Employment Information” (signed by the employer or HR) and CMS-40B “Application for Enrollment in Medicare Part B.” Under “Remarks #12,” state which month you want your Medicare Part B to start. Take your forms to your specific Social Security office either in person, by fax, or by priority mail to enroll in Medicare Part B. Remember to write the words “Special Enrollment Period” across the top of each form to keep from receiving the famous Medicare Part B penalty.

The Medicare & You handbook discusses on page 19 under the subtitle “I Have Other Health Coverage. Should I get Part B?” about delaying Medicare Part B when you leave employer benefits. The handbook states on page 18 under “Special Enrollment Period” that one can sign up for Part B anytime during the 8-month period that begins the month after the employment ends or the coverage ends, whichever happens first. 

During a Toni Says Medicare consultation, we recommend that your and/or your spouse’s Medicare Parts A and B begin the first day that the employer health plan is ending, to be sure there is medical coverage when a medical need occurs.

Remember, with Medicare, what you don’t know WILL hurt you! For more Medicare help, call the Toni Says Medicare hotline at (832) 519-8664 or visit our website www.tonisays.com for assistance. Toni’s new Medicare Survival Guide bundle is also available on our website.

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