If you are 65 or older, it can be beneficial to sign up for Medicare – even if you are still working and covered by employer health insurance.
Medicare May Reduce Out-of-Pocket Costs
Original Medicare is offered by the federal government for people who are 65 or older, certain younger people with disabilities and people with End-Stage Renal Disease. It includes two parts: Part A and B. Part A includes coverage for inpatient hospital care, skilled nursing facility care, hospice care and home health. Part B includes coverage for outpatient care from doctors and other healthcare providers, home health care, durable medical equipment and many preventative services.
Compare the costs and benefits under Medicare to the coverage, benefits and out-of-pocket expenses you have with your employer health insurance. You may find it is cheaper for you to have Medicare. Enrolling in Original Medicare while you work and have coverage from your employer can also help fill gaps in your existing coverage without you having to pay additional out-of-pocket costs and may help reduce some medical expenses.
Medicare Part A is Free
When you turn 65 years old and have worked at least 10 years in the U.S., you may be entitled to premium-free Medicare Part A.
However, if you enroll in Part B you will have an additional premium to pay in addition to your existing employer plan. As of 2021, the premium for Part B is $148.50 per month. Medicare premiums, deductibles, and coinsurance rates are adjusted annually.
Size of Employer Matters
Your employer’s size determines whether you may be able to delay enrolling in Original Medicare Part A and Part B without having to pay a late enrollment penalty.
- Delaying Medicare enrollment when employer has 20 or more employees:
If you have coverage under a group health plan through an employer that has 20 employees or more, it’s not necessary to enroll in Medicare at age 65. Your company will remain your primary insurer, and you can delay enrolling in Part A and Medicare Part B and not have to pay a lifetime late enrollment penalty for Part B if you enroll later.
If you are eligible for premium-free Part A, you can enroll in Part A at any time after you become eligible.
Consult with your benefits administrator for help understanding how your group plan will cover you without Part A and Part B when you reach age 65 and beyond if you are considering delaying enrollment.
- Delaying Medicare enrollment when employer has fewer than 20 employees:
If you’re still working at age 65 and have coverage under a group health plan through an employer that has less than 20 employees, you should enroll in Medicare Part A and Part B when you are first eligible.
In this case, Medicare is considered your primary insurance—even if you have not enrolled in Medicare. Your employer’s plan is considered your secondary insurer.
If you do not sign up for Medicare Part B as soon as you are eligible, you may have to pay a penalty, and there could be a delay in coverage.
Signing Up for Medicare If You Have a Health Savings Account
Those who enroll in Medicare Part A and B cannot also contribute to a health savings account (HSA). If you have a health savings account and want to keep contributing to it, you must delay enrollment in Medicare Part A and Medicare Part B.
To avoid a tax penalty, you should stop making contributions to your health savings account at least six months before you apply for Medicare.
Be Aware of Penalties
Medicare has penalties for late enrollment, so it is important to know what circumstances will enable you to delay enrollment without penalty.
If you do not enroll in Medicare at 65 because you are still working and have employer coverage, the penalty is not applied. However, when you decide to enroll in Medicare, you will be asked to show proof of employer coverage.
Avoiding Penalties with Part A: In many cases, applying for Medicare Part A when you become eligible is a good idea (even if you have coverage under a group health plan) to avoid penalty if you try to enroll later. Signing up for Part A before your employer coverage ends will also help you avoid a gap in your healthcare coverage.
If you do not enroll in Medicare part A at age 65 and do not sign up within eight months of ending your employment or losing employer coverage, you may have to pay a penalty.
Avoiding Penalties with Part B: If you are 65 or older and you or your spouse still have employer health coverage, delaying enrollment in Medicare part B can help you avoid paying additional premiums. However, it is important to sign up for Medicare Part B within eight months of ending your employment or losing your employer coverage. If you do not, your monthly premiums for Medicare Part B may include a late enrollment penalty that you will be required to pay for the rest of your life. You may also experience a gap in health care coverage.
What to Do When Planning to Retire
Contact your benefits administrator to learn about your options and the paperwork you must complete to prepare for retirement as it pertains to Medicare.
You can also contact Katie Sarkorh at 910.667.6442 if you have questions about enrollment in Medicare.
H6306_22_11301_C FMD Approved 08/18/2021