Should I Go on Medicare if I’m Still Working at 65?

For most Americans reaching Medicare age—working or not—there aren’t many good reasons not to enroll in Medicare at age 65.

A lot of people who are still working once they reach Medicare age aren’t certain whether they really need to sign up for Medicare during the seven-month Medicare Initial Enrollment Period in which they turn 65.

Medicare and Employer Coverage – Key Points:

Medicare and employer coverage can coexist, and the coordination between the two depends on factors like age, employment status, company size, and the type of coverage offered.
When an individual is 65 or older and actively working with employer-sponsored health insurance, the employer coverage is usually primary, and Medicare serves as secondary coverage.
If an individual works for a small employer (with fewer than 20 employees) or has end-stage renal disease (ESRD), Medicare becomes the primary payer, even if they have employer coverage.

Medicare as Primary and Employer Coverage as Secondary:

Retirees with Employer Coverage: When an individual reaches the age of 65 or becomes eligible for Medicare due to a disability while having employer-sponsored health insurance through their own or their spouse’s current employer, Medicare becomes the primary payer, and the employer coverage becomes secondary.
Small Employer Exception: If an individual works for an employer with fewer than 20 employees and becomes eligible for Medicare, Medicare will be primary, and the employer plan remains secondary.
Medicare and COBRA: If an individual is eligible for both Medicare and COBRA (Consolidated Omnibus Budget Reconciliation Act) continuation coverage, Medicare is primary, and COBRA becomes secondary.
End-Stage Renal Disease (ESRD) Patients: In certain situations, such as ESRD, Medicare may be primary for beneficiaries, even if they have employer coverage.

Employer Coverage as Primary and Medicare as Secondary:

Working Seniors with Employer Coverage: If an individual continues to work beyond the age of 65 and has employer-sponsored health insurance, the employer coverage is typically primary, and Medicare acts as secondary coverage. In this scenario, individuals may delay enrolling in Medicare without facing penalties.
Large Employer Exception: For individuals working for employers with 20 or more employees, the employer coverage is primary, and Medicare is secondary.
Medicare and Group Health Plans: If an individual has employer-sponsored group health coverage through their own or their spouse’s current employment and qualifies for Medicare due to age, they can delay enrolling in Part B (medical insurance) without penalty as long as the employer coverage is considered “creditable.”

Your Primary Coverage

Medicare and Retiree Health Plans:

Medicare and Retiree Health Plans from Employers: Some employers offer retiree health plans to their former employees. In this scenario, Medicare typically becomes the primary payer, and the retiree health plan acts as secondary coverage.
Medicare Advantage Plans for Retirees: In some cases, employers may offer Medicare Advantage plans to their retirees as an alternative to traditional retiree health plans. In such cases, the Medicare Advantage plan would become the primary coverage.

Exceptions and Company Size Scenarios:

Small Employer Exception: As mentioned earlier, employers with fewer than 20 employees are considered small employers and are subject to different rules regarding Medicare as the primary or secondary payer.
Large Employer Exception: Employers with 20 or more employees are considered large employers and must follow the Medicare Secondary Payer (MSP) rules, where employer coverage is primary for eligible employees, and Medicare is secondary.
Medicare Secondary Payer (MSP) Rules: These rules dictate how Medicare coordinates with other types of insurance, including employer coverage, to determine the order of payment.

Comparing Employer Group Insurance to Medicare

When deciding between employer group insurance and Medicare as primary coverage, it’s essential to evaluate several factors to make an informed decision. Below is a breakdown of what to compare and consider:

1. Coverage Benefits:

Scope of Coverage: Compare the coverage provided by your employer’s group insurance plan with what Medicare offers. Consider services such as hospital stays, doctor visits, prescription drugs, preventive care, and additional benefits like dental, vision, and hearing coverage.
Out-of-Pocket Costs: Analyze the cost-sharing structure of both plans, including deductibles, copayments, coinsurance, and annual maximums. Determine which plan offers better financial protection against healthcare expenses.

2. Provider Network:

In-Network Providers: Evaluate the networks of healthcare providers and facilities included in both plans. Determine if your preferred doctors, specialists, hospitals, and pharmacies are within the networks.
Out-of-Network Coverage: Understand how each plan covers out-of-network services and whether you have the flexibility to seek care from providers outside the network if needed.

3. Flexibility and Accessibility:

Portability: Consider the portability of coverage in case of job changes, retirement, or relocation. Assess whether one option provides more flexibility and continuity of coverage.
Access to Care: Evaluate factors such as waiting periods, prior authorization requirements, and access to specialized care or medical treatments under each plan.

4. Cost Considerations:

Premiums: Compare the monthly premiums for both employer group insurance and Medicare. Determine how these costs fit into your budget and whether they are subject to change over time.
Employer Contributions: If your employer subsidizes a portion of the group insurance premiums, factor in the value of this contribution when comparing costs.
Medicare Premiums and Costs: Understand the different parts of Medicare (Part A, Part B, Part D, and supplemental plans) and their associated premiums, deductibles, and other out-of-pocket expenses.

5. Prescription Drug Coverage:

Formularies: Review the drug formularies of both plans to ensure that your prescription medications are covered. Pay attention to any restrictions, such as prior authorization or step therapy requirements.
Cost-Sharing: Compare the copayments or coinsurance for prescription drugs under each plan, especially if you take medications regularly.

6. Additional Benefits and Services:

Extra Benefits: Consider any additional benefits offered by either plan, such as wellness programs, telehealth services, care management, or discounts on health-related products and services.
Value-added Services: Assess the value of services like nurse hotlines, health coaching, or chronic disease management programs in improving your overall health and well-being.

7. Medicare Enrollment Eligibility:

Medicare Eligibility: Understand the eligibility criteria for enrolling in Medicare, including age, disability status, and qualifying medical conditions. Determine if you meet the requirements for Medicare enrollment and when you should enroll to avoid late penalties.

By thoroughly comparing and considering these factors, you can make an informed decision about whether employer group insurance or Medicare would be recommended as your primary coverage based on your individual healthcare needs, preferences, and financial circumstances. Consulting with a trusted insurance advisor or benefits counselor can also provide valuable guidance in navigating this important decision.

Here are a few reasons people still working at 65 give from time to time to explain their decision not to enroll in Medicare:

My employer provides health insurance.

It’s understandable that many employees 65 and over are comfortable with the private insurance they may have had for years. It’s understandable they don’t want to give that up. But many people don’t understand that they don’t have to give up their private insurance in order to enroll in Medicare.

Medicare is compatible with the private health insurance your employer provides.

If you have private health insurance, you don’t need to cancel your current plan in order to enroll in Medicare. More importantly, enrolling in Medicare won’t decrease your current health benefits.

Your private plan will continue its current coverage, and Medicare will become your secondary payer. This means Medicare will increase your coverage by helping cover some of the costs your private plan doesn’t cover.

If you’re a military veteran receiving Veterans Affairs health benefits, Medicare is equally compatible with the VA Medical Benefits Package. If you’re 65 and have VA health benefits, enrolling in Medicare will bolster your VA coverage without reducing any of your veterans benefits. By enrolling in Medicare, you’ll have greater flexibility when it comes to managing your healthcare, and your treatment won’t be limited to VA facilities.

Regardless of the health coverage you currently have, if you’re still working at age 65 there’s usually no reason to delay enrolling in Medicare simply because you already have health coverage.

I don’t want to pay any extra premiums.

Well, who does? But if you’re happy with your current plan and it provides the coverage you need, you can probably sign up for Medicare without having to worry about monthly premiums. Although there is a monthly premium for everyone enrolled in Medicare Part B, staying enrolled in Part B isn’t mandatory. If your current plan provides good medical coverage, you can disenroll from Medicare Part B. You can limit your Original Medicare enrollment to Part A, which provides basic hospital coverage and is available premium-free to people who paid into the system (or whose spouses paid into the system) for at least ten working years. Over 98% of seniors are eligible for premium-free Part A coverage.

I don’t need Medicare right now, so why should I enroll?

As far as Medicare is concerned, you need to look to the long term. You may think you don’t need it now, but it’s important to look at the possible long-term costs of not enrolling in Medicare when you’re first eligible to do so.

Consider:

Signing up for Medicare during your Initial Enrollment Period eliminates late enrollment penalties you may have to pay if you enroll in Medicare later. These penalties include the Medicare Part B late enrollment penalty and the Medicare Part D late enrollment penalty.

If you opt out of Part B but decide to enroll later, in most cases you’ll have to pay a penalty of 10% of your Part B premium for every 12-month period you could have had Part B coverage but didn’t. This penalty will apply as long as you remain on Medicare. There are exceptions to this penalty obligation, but most late enrollees in Medicare Part B pay dearly for the delay. If you opt out of Part B, future opportunities to enroll will be limited to regular annual enrollment periods.

The Medicare Part D late enrollment penalty is currently set at 1% of the average Medicare prescription drug plan premium in your state. You may be exempt from the Part D penalty, however, if you had creditable (similar or better) drug coverage during the time you were eligible for Medicare Part D coverage but weren’t enrolled in a Part D prescription drug plan.

If you enroll in Medicare after your Initial Enrollment Period and don’t qualify for premium-free Part A coverage, you may also be obligated to pay a Part A late enrollment penalty.

Your employer may be providing the coverage you need for now, but don’t neglect to look at the long-term implications of not enrolling in Medicare when you’re first eligible

You probably know the benefits of medicare supplement insurance, which help fill the gaps in medicare coverage. even though you’re still working and may not see a need for medigap insurance now, you need to be aware of your medigap open enrollment period.

During your Medicare Open Enrollment Period—a one-time opportunity that starts the first month you’re 65 and enrolled in Medicare Part B—there are no medical underwriting considerations, and you’re able to enroll in any Medicare supplement plan available in your state. Although you’ll still be able to apply for Medigap coverage if you enroll in Medicare after age 65, you won’t have another Medigap Open Enrollment opportunity. If you apply for a Medigap plan at any time after your Medigap Open Enrollment Period ends, medical underwriting will apply, and you may not qualify for the plan you want. In order to apply for Medigap coverage, you must be enrolled in Original Medicare (Medicare Part A and Medicare Part B), and unless you enroll in Original Medicare during your Medicare Initial Enrollment Period, you won’t have the benefit of Medigap Open Enrollment.

Being adequately covered for the short term isn’t an acceptable substitute for looking out for your long-term interests. You may be working now, but you’ve got to prepare for the day you’re no longer working. Will your employer remain on your side? Your employer’s health benefits may continue to serve you well in the future, but unless you’ve got a compelling reason not to enroll in Medicare at age 65, do you really want to gamble over the long term? If you look at the big picture, enrolling in Medicare seems to be the best option for most 65-year-olds still in the workforce.

Medicare can go a long way toward helping you maintain your good health—if you have the experience and knowledge to take advantage of it. If you have questions about senior healthcare, including Original Medicare (Medicare Part A and Part B), Medicare supplement plans, or Medicare Advantage, contact MedicareMall now and let us save you money and lead you with confidence through the Medicare maze!

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