Most beneficiaries first become “Medicare eligible” at the age of 65, but what happens if you plan to work past 65 and still have group medical coverage through you or your spouse’s employer? Data from the U.S. Bureau of Labor Statistics (BLS) shows you’re not alone – by 2024 the labor force will have 13 million people ages 65 and older. It’s important to figure out how Medicare factors into your plans, even if you have health insurance through your employer. After all, you don’t want to be unintentionally penalized for delaying enrollment in Medicare.
If you decide to work past 65, we recommend consulting your employer’s benefits manager. They can help explain your employer group coverage and provide valuable information to help weigh your options. To help you out, we’ve also compiled six Medicare facts to consider if you work past 65 or continue to have employer group coverage
1. The size of your employer is a main determinant whether you should delay Medicare Part B.
Employers with fewer than 20 employees are not required to provide an employee or covered spouse, who is 65 and becomes eligible for Medicare, with the same coverage as other employees. Smaller employers may require you to enroll in Medicare or offer coverage that is supplemental to Medicare, such as paying the Medicare deductibles and cost-sharing. If your company has fewer than 20 employees, you should sign up for Medicare (Parts A and B) at age 65 when you are first eligible. Medicare becomes your primary insurance coverage, and your employer group policy is secondary. If you delay Medicare because you are covered by a group health plan, you have 8 months to apply for Medicare Part B, starting when you or your spouse stops working or when the group coverage terminates, whichever is sooner. If you enroll in Medicare Part B after the 8 months of your group coverage termination, you may incur a late enrollment penalty.
Working for a larger company gives you more options. You can choose to stay with your employer group policy and delay enrollment in Medicare without a penalty, drop your group coverage in favor of Medicare coverage, or go with a combination of both. If you go with a combination, your group coverage will be primary and Medicare will be secondary. Compare your current healthcare benefits with Medicare to decide what works best for you.
2. You can enroll in a Medicare Advantage (MA) plan if you are still working.
If you enroll in Medicare, you have the option to choose an MA plan as an alternative to Original Medicare (Parts A and B). An MA plan will provide the same Part A and Part B benefits, Part D benefits (for MAPD plans) and may offer additional supplemental benefits such as dental, vision and hearing. Note, you’ll need to enroll in Parts A and B in order to do so. But be careful! In some cases, enrolling in an MA plan can cause you to lose your employer group coverage. Your benefits administrator can confirm this before you decide.
3. You cannot contribute to a health savings account (HSA) if you are enrolled in Medicare or even just Medicare Part A.
Many people choose to sign up for Part A (hospital coverage) because it’s free (as you long as you’ve worked for 10 years and contributed through payroll taxes). However, this affects your HSA. The IRS says you can draw on funds already in your account, but you cannot add to them. This means you can use your HSA for qualified medical expenses which include Medicare costs.
4. If your employer’s group health insurance has a “creditable” prescription drug plan, you do not need to sign up for a Medicare Part D plan.
Check with your benefits administrator to determine whether your employer group health plan coverage provides creditable prescription drug coverage (which means it is as good as or better than the standard Medicare Part D benefit). If you do not have creditable prescription drug coverage, you have a two-month special enrollment period (SEP) to enroll in a Medicare Part D plan. If you miss the two-month SEP, you generally can enroll in a Part D plan only during the Annual Election Period (October 15 – December 7) and your coverage will start January 1. If you have a gap in creditable prescription drug coverage for more than 63 days, you will be charged a late enrollment penalty. The penalty is 1 percent of the current average national premium for Part D plans for each month you delay enrolling in a Medicare Part D plan and didn’t have creditable coverage. The penalty is added to your monthly Part D premium for as long as you are covered by a Part D plan.
5. You cannot delay Medicare Part B enrollment due to COBRA coverage or retiree benefits.
COBRA is a federal law that may let you keep your employer group health plan for a limited time after your employment ends, generally 18 months. You have 8 months after your group health coverage ends to sign up for Part B. If you miss this period, you will have to wait until January 1 – March 31 to sign up and coverage will start July 1. This delay may cause a gap in your coverage and you may have to pay a lifetime Part B late enrollment penalty. Remember, you can only delay Part B (without penalty) if you or your spouse are actively employed and are part of a group health plan.
6. Delaying Medicare Part D enrollment due to COBRA coverage or retiree benefits.
This is possible if your COBRA or retiree benefits are considered credible by Medicare. As mentioned in #4, once your COBRA or retiree benefits end, you’ll have a two-month SEP to enroll in Medicare Part D.
If you have any more questions, speak with your benefits administrator. You can also call one of our Health Plan Advisors at Aspire Health Plan at (855) 378-9680. (TTY users call 711.) We’d be happy to answer your questions.