Working Past 65? What to Do About Medicare

In 1985, only 10% of Americans over the age of 65 were still in the workforce. Today, that percentage has doubled to 20%. By 2024, some 13 million Americans over the age of 65 will be in the workforce, according to projections from the Bureau of Labor Statistics. Many people approaching retirement age wonder what to do about Medicare enrollment. Will you be able to stay on your employer’s plan? Should you enroll in Medicare? 

Failure to enroll in Medicare Part B when first eligible normally results in a permanent late enrollment penalty in the form of a higher premium. But there are exceptions. Depending on your situation and the size of your employer, it may make sense to stay on your employer’s plan and delay Medicare enrollment. The general rule is that most people should enroll in Medicare Parts A and B during their initial enrollment period. If you’re still actively working and covered under your employer plan, you can delay Medicare enrollment without incurring late enrollment penalties. When you retire or lose coverage, you’ll have another eight months to enroll without a late enrollment penalty.

Employer Size Matters

Employer size is a major decision factor: If your employer has 20 workers or more, they must continue to offer you the same health care benefits they offer younger employees. If they have fewer than 20, they can choose whether to extend their plan to Medicare-eligible workers.

Larger Businesses (20 or More Employees)

If your company has at least 20 employees and you’re happy with their plan, consider keeping it and delaying Medicare enrollment. This is because coverage for larger employer plans is primary, while Medicare coverage is secondary. That is, your workplace plan will pay all covered benefits first, with Medicare paying only what your primary coverage doesn’t cover.

That means you could be paying Medicare Part B premiums, but receiving very little coverage over and above what you’re already getting from your workplace plan.

Since there’s no late enrollment penalty to worry about, you can avoid Medicare premiums by delaying enrollment without worrying about penalties.

Small Businesses (Fewer Than 20 Employees)

With smaller firms of fewer than 20 employees, on the other hand, Medicare coverage is primary. It pays for all covered services, with your employer plan paying only what Medicare does not cover. In this scenario, it may make more sense to enroll in Medicare as soon as you are eligible.

With smaller employers, you can still buy Medicare Supplement (Medigap) insurance within 63 days of coverage ending.

The Takeaway

Medicare decisions are complex. There are a lot of rules, and making the wrong move can cause long-lasting problems. Call us right before you reach age 65, or before you make any decisions regarding your health insurance and Medicare coverage. We can help review your situation and enable you to make the right decision.

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