Medicare and Working Past 65
on Jun 24, 2024
If you plan to work past age 65, it is important to carefully consider when to sign up for Medicare to avoid costly penalties. Here are some key points to keep in mind when deciding whether to enroll in Medicare at age 65 or delay until retirement.
Medicare Enrollment
Signing up for Medicare coverage when you are first eligible is crucial unless you have other coverage that is comparable to Medicare, such as employer-sponsored insurance. Medicare enrollment typically begins three months before your 65th birthday and extends for three months after. However, if you are still working and covered by your employer’s health insurance, you may qualify for a Special Enrollment Period (SEP) that allows you to enroll in Medicare without a penalty for up to 8 months after your employment ends.
Primary vs. Secondary Payer
The coordination between your employer’s insurance and Medicare depends on the size of your company. For larger companies with 20 or more employees, your employer coverage typically remains primary, while Medicare becomes secondary insurance if you enroll. For smaller companies, Medicare may become the primary payer, necessitating enrollment at age 65. It is recommended to speak with your employer to understand how your employer plan interacts with Medicare.
Employer Coverage vs. Medicare
Comparing your employer’s health plan with Medicare options is essential, taking into account premiums, deductibles, co-pays, coverage scope, and prescriptions. Consider how your Medicare enrollment will impact your spouse’s coverage if they rely on your employer’s health plan and are not yet eligible for Medicare.
Health Savings Accounts
If you contribute to a Health Savings Account (HSA), keep in mind that you cannot contribute once you are enrolled in Medicare. Delaying Medicare enrollment while maintaining a high-deductible health plan allows continued HSA contributions until enrollment. Plan contributions carefully to maximize benefits and avoid excess contributions.
The Various Parts of Medicare
- Part A (Hospital Insurance): Covers hospital care, skilled nursing facility care, hospice, and some home health care.
- Part B (Medical Insurance): Covers outpatient care, doctor services, preventive services, and some home health care.
- Part C (Medicare Advantage): Provides an alternative to Original Medicare and includes all benefits covered under Parts A and B.
- Part D (Prescription Drug Plan): Covers prescription drugs and is subject to premium and IRMMA.
COBRA and Medicare
If you retire before age 65 and continue your employer plan through COBRA, note that COBRA is not considered creditable coverage for delaying Medicare enrollment without penalty. Plan your transition from employer insurance to Medicare carefully to avoid gaps in coverage and potential penalties.
FAQ
Can I delay Medicare enrollment if I have employer-sponsored insurance?
If you have employer-sponsored insurance, you may be able to delay Medicare enrollment without penalty as long as you meet certain criteria and enroll during a Special Enrollment Period (SEP).
Can I contribute to a Health Savings Account (HSA) while enrolled in Medicare?
No, you cannot contribute to an HSA once you are enrolled in Medicare. It is recommended to plan your HSA contributions carefully as you approach age 65 to avoid excess contributions.
Conclusion
Deciding when to enroll in Medicare when working past age 65 requires careful consideration of your specific situation and employer coverage. Understanding the implications of delaying Medicare enrollment can help you avoid penalties and ensure seamless coverage transitions. Consult with a financial planner or your State Health Insurance Assistance Program (SHIP) office for personalized guidance on navigating Medicare and employer coverage.