Working past 65 has become more common in recent years than ever before. Many people are postponing retirement until their full retirement age or even after. Most people become eligible for Medicare at 65 unless they qualify early due to specific disabilities. If you’re approaching Medicare age and still working, you may wonder what your options are. Is Medicare mandatory at 65? Can you delay Medicare while you work? Can you have Medicare while you work? These are common questions people ask when they are actively working at 65.
The answers are more complex than yes or no, as it depends on your employer’s size. You should also consider your budget and healthcare needs to determine whether you want to enroll in Medicare while employed or wait until you retire. If you plan on retiring in 2023 visit https://boomerbenefits.com/retiring-in-2023/ to learn more about that process.
Working for a large employer
A large employer is one with 20 or more employees. Large employer insurance is creditable for Medicare, which means when you actively work for a large employer and are covered by their insurance, you can delay Medicare past 65 if you want. Many people will enroll in Medicare Part A since it’s premium-free for most people and delay the rest of Medicare while they work.
However, if you contribute to a Health Savings Account and wish to continue to contribute, you would want to delay all parts of Medicare while you contribute.
If you enroll in Medicare while actively working for a large employer, Medicare will be secondary insurance to employer coverage. This means it will help lower your out-of-pocket expenses during the year.
But you’ll want to remember that you will pay the Part B premium when enrolled. The Part B premium is based on your income from two years prior. So, if you had a higher income, you would pay more for Medicare Part B.
Should I opt out of employer insurance?
Your other option is to continue to work but opt out of the employer insurance and enroll in Medicare. Consider this option if your employer insurance is costly or you meet a high deductible each year.
However, you would want to carefully compare your options because sometimes employer insurance can be more cost-effective for prescriptions, and it can be a shock once you enroll in Medicare.
Working for a small employer
Small employers are those with at most 20 employees. If you are actively working for a small employer, that insurance is not creditable for Medicare. This means you will want to enroll in Medicare Part A and Part B at 65 because Medicare will be primary to the employer insurance.
You have two different options in this scenario. One option is to enroll in Medicare and keep the employer insurance as secondary while you continue to work. The second option is to enroll in Medicare, drop the employer insurance, and choose a Medigap or Medicare Advantage plan to go along with your Medicare.
Even when working with a small employer, you can have Medicare insurance and would likely want to enroll to avoid a late enrollment penalty. If you continue with coverage that’s not creditable for Medicare past 65, you will have a late enrollment penalty.
Are additional Medicare plans necessary while working?
When enrolled in Medicare Parts A and B, you can enroll in a Medigap plan or Medicare Advantage plan. These plans help with your out-of-pocket costs for hospital and medical services. Since Original Medicare does not cap your costs, these plans can be financially helpful.
When you have employer coverage in addition to Medicare, you do not need a Medigap plan or an Advantage plan. It’s not necessary to have three different insurance policies. In fact, you’ll likely experience coordination of benefits issues or pay for a policy that isn’t even picking up costs.
Once you retire, you will have specific windows to get a Medigap or Medicare Advantage plan. So, don’t feel like you need to get a plan right when you turn 65, even though you have employer insurance.
What about the Part D penalty?
Medicare Part D does have a lifelong late enrollment penalty associated with it if you don’t enroll when you’re first eligible and don’t have creditable coverage. Most employer insurance is creditable, but it’s common for HSA health plans not to offer creditable coverage. Your employer should send annual creditable coverage letters that state whether your drug coverage is creditable for Medicare. If it is, you can delay Part D past 65 without penalty while you have that coverage.
Wrapping up
You can have Medicare while actively working, but you will want to determine whether or not it will be cost-effective. You can work with a Medicare broker to help you evaluate all your options.
Disclaimer: This content does not necessarily represent the views of IWB.