Working Past 65 – Should You Enroll or Delay Enrollment in Medicare?

Are you choosing to work past age 65? Many people are, and by doing so, there are some important decisions that you will have to make regarding your healthcare coverage.  Determining what your options are when working past 65 is one of the trickier aspects of Medicare enrollment.

You might have the option to delay Medicare enrollment and keep your employer benefits, or it might be more cost-effective for you to enroll in Medicare during your Initial Enrollment Period (IEP) and make Medicare your primary insurance. With either scenario, it is imperative that you do your research to determine which option is most cost-effective, and make these decisions prior to your IEP so that you avoid late enrollment penalties should you miss your enrollment window.

Delaying Enrollment Versus Transitioning to Medicare

Many people choose to delay Medicare enrollment and keep their employer healthcare coverage until deciding to disenroll or retire.  The size of your employer and how much you pay for your employer’s group health plan will have the most impact on your decision to enroll into Medicare during your IEP, or delay enrollment and stay on your group health plan.

Per Medicare guidelines, if you work for an employer (or receive your benefits through your spouse’s employer) that has less than 20 employees, Medicare will automatically become your primary payor, and your existing health plan will be considered the secondary payor. Therefore, it is strongly encouraged that you enroll into Medicare during your IEP, and explore your options for additional coverages. Should you not enroll during your IEP, you would, by default, become the primary payor of all your Medicare eligible claims and bills.  Additionally, you could face lifetime penalties for enrolling in Parts A and B outside of your Initial Enrollment Period.

If you work for an employer (or receive your benefits through your spouse’s employer) that has more than 20 employees, Medicare will automatically become the secondary payor behind your existing group plan who will be the primary payor.  Therefore, you have the option to keep your existing group health coverage as your primary, and delay enrollment in Medicare.

Should you choose to keep your existing group plan, you must first certify that your employer coverage is considered creditable by Medicare. By obtaining Credible Coverage, you can delay enrollment in to Part B until later without incurring late penalties when you decide to retire. Once your employer coverage is deemed creditable, by meeting or exceeding Medicare benefits, you can remain on your employer benefits until you decide to opt out of their benefits or retire.

However, if it is not deemed creditable, you would need to enroll into Medicare during your IEP, or again face penalties for enrolling in Medicare outside your Initial Enrollment Period. And, to make it worse, you would also be your primary payor of all Medicare eligible claims and bills.

Other Options to Consider

People who work for companies with over 20 employees have another option as well. You can choose Medicare as your primary insurance, leave your employer health plan, and explore other options for additional coverage such as a Medicare Supplement plan. This is often found to be cost-effective as it can reduce your out-of-pocket costs such as deductibles and copays.

Another option is to keep your employer coverage, enroll in Medicare as well, and Medicare, as the secondary payor, will coordinate with your primary coverage. We strongly recommend that you compare the cost of your group plan against what it would cost you to transition to Medicare as your primary insurance.Additional Factors to Consider

  • Those that are enrolled in an HSA or HRA plan cannot enroll in Medicare Parts A and B.
  • Many employees with employee health coverage still enroll in Part A because it is premium-free if you have worked the required ten years or forty credits. Part A can coordinate with your group plan and provide secondary coverage to lower your costs while working.
  • If you are married and either your spouse or you is younger than age 65, we recommend that you also consider the cost of health coverage for the spouse of the Medicare beneficiary.
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