Working Past 65 and Medicare

Approaching retirement age?  Working past age 65?  You still have Medicare choices to make.  If you choose poorly, you’re going to be out quite a bit of money for coverage you don’t need.  The options are a bit confusing.  This post will help you understand your options.

The latest research is showing more and more people are working past the typical retirement age of 65.  Not only does it seem to be good for your health, but it’s good for your wallet, too.

In May of 2016, Pew Research reported  18.8% or nearly 9 million Americans reported being employed full- or part-time over the age of 65.

So clearly, there are a there are many people who continue working even when they reach 65, which is the stereotypical retirement age for most people. For these folks, there are undoubtedly going to be many questions they have about their medical insurance coverage.  These could include:

  • Do I need to take Medicare now?
  • Should I delay in enrolling in Medicare Part B? What happens if I do?
  • Should I Delay Medicare Part B Enrollment?
  • What about Part A?
  • What if I have a Health Savings Account (HSA)?

The simplest answer to these questions is…maybe.  I know that’s not very helpful, but stick with me.

Do I need to take Medicare now?

If your work doesn’t provide health insurance, then the easy answer is YES.  Get automatically enrolled in Part A, allow yourself to be enrolled in Part B and choose a Medicare plan. There are essentially only 2 options you need to consider:

  1. Stick with original Medicare and buy a Part D plan.  If you’d like (and I’d recommend you strongly consider it) buy a Medicare Supplement (Medigap) plan.  Medigap plan F is by far the most popular plan purchased due to its near-100% coverage for everything Medicare doesn’t cover, medically.  Check out my post comparing Medigap plan F with Medigap High-Deductible plan F by clicking here.
  2. Enroll in a Medicare Advantage plan that covers both medical and prescription drugs.  You can find out more about whether this is the right choice for you by reading by clicking here.

If your work provides health insurance with prescription drug coverage, you’re more than likely best served staying on your plan.  However, it would be wise to enroll for Medicare Part A. This is because it is free for most people who have been paying Medicare taxes as part of their payroll taxes. It would wouldn’t make sense to avoid Part A. The important thing to note is that Medicare Part A would only kick in after your group’s health insurance cover runs out.

Should I delay in enrolling in Medicare Part B?  What happens if I do?

If you’re over the age of 65 and are still working and staying on your employer’s health insurance plan, you should probably delay enrolling.  There are advantages to delaying Medicare Part B enrollment and Medicare Part D enrollment in most cases. Don’t worry.  It’s possible to get them later when you officially retire or if you lose your insurance due to a job loss.  There is a special enrollment period of eight months allowing people to enroll in Medicare Part B and Medicare Part D for people who fall in this category.  All you have to do is prove you had good, “qualifying coverage” for medical and prescription drugs through your employer and you won’t get penalized.

Here’s where the “maybe” from above comes in.  There are a few exceptions:
1.  If you are working (or your spouse is working) in a company with 20 or fewer employees, you may be required to sign up for Medicare, because for small businesses, your group health insurance automatically becomes  your secondary health coverage. That means it pays AFTER Medicare pays.  So, you’ll want to accept Medicare part A when you’re eligible, and accept Medicare part B when you’re eligible AND get a PDP.
2.  If you are currently in an unmarried domestic union, then you may not have the right to delay signing up for Part B without paying the late penalty.

Should I Delay Medicare Part B Enrollment?

1. If you are still working past the age of 65 and on your employer’s medical and prescription drug insurance, you don’t need Medicare Part B.  You can certainly sign up for it if you like, but it won’t actually do any good.  This is because your employer’s insurance is covering what Part B would have covered.  If you delay enrollment in Medicare Part B, you don’t have to pay for it until you retire.  REMEMBER our little lesson from above, however…  If you work for a small company under 20 employees, Medicare becomes PRIMARY – meaning they pay FIRST, and then your employer health insurance pays the rest.  In this case, you need to elect enrollment in Medicare Part B and pay for the monthly premium.  Check with your Human Resource department (or benefits person) at work for guidance.
2.  It is possible to delay your Medigap Open Enrollment period, which gives you the right to purchase Medigap insurance without any bias to pre-existing medical conditions. This means, no underwriting.

What about Medicare Part A?

Everyone is encouraged to enroll for Part A, as it’s actually an entitlement.  You’ve been paying for Medicare Part A from every paycheck you’ve ever received.  It’s no cost to most people.  The only time there could be a premium is if you haven’t worked the qualifying number of months/quarters.

What if I have a Health Savings Account (HSA)?

If you have a Health Savings Account (HSA) and are still working, and covered under your employer’s health insurance plan, you may want to push off your enrollment in Part A.  As soon as you sign up for part A, neither you nor your employer can legally contribute to your HSA anymore. However, once you retire or stop working, the funds left in your HSA can pay for Medicare Part(s) A, B, C, and/or D.  They can’t be used to pay for Medicare Supplement (Medicap) policy premiums.

The Takeaway:

Generally speaking, if you work past the age of 65 and you get insurance through your employer, keep it.  Take Medicare Part A when it’s given to you, opt NOT to take (and pay for) Part B when it’s offered, and don’t buy an MAPD, Medicare Supplement (Medigap) or Part D (PDP) plan.

If you work for a company with fewer than 20 employees, Medicare is primary.  This means it pays before your employer insurance does.  In this case, enroll in Medicare Part B.

If you’re working and your employer doesn’t offer insurance, take Medicare A, B and choose either C (Medicare Advantage) or Part D (PDP).  If you don’t choose a Medicare Advantage plan, you’ll need a PDP plan and probably a Medicare Supplement.