In a world of ever-changing healthcare options (or lack thereof), navigating Medicare is confusing for most. If you plan to work past the age of 65, you should clearly understand how Medicare works and enroll when required to. There are considerations for those of you who are enrolled in employer healthcare plans.
If you work for a company that ensures 20 or more employees and continues group insurance after that age, you can wait to enroll in Medicare until that coverage ends. However, if you work for a company that provides insurance for less than 20 employees, you have some choices to make. In some cases, if you’re part of an employer healthcare plan covering less than 20 people, you can continue that coverage when you turn 65 if the employer allows you to do so.
If you work for a company that insures more than 20 employees, that coverage can continue after you reach the age of 65. You don’t have to enroll in Medicare immediately, but have an 8-month period in which to do so. However, it’s not unheard of for businesses that provide group insurance for less than 20 employees to continue coverage past that age, whether you enroll in Medicare or not. In other words, the plan provider generously opts to continue covering workers who are 65 and older.
Options for Employees Covered by Employer Healthcare Plans Offering Coverage after 65
If you work for a company that does this, you have two choices:
1. Do not enroll in Medicare and continue coverage with the employer-sponsored plan. Your employer-plan benefits do not change. When the plan coverage does end, you (and/or your spouse) can apply for Medicare within 8 months without incurring a late-enrollment penalty.
2. Enroll in Medicare and continue the employer health insurance coverage. In this instance, Medicare becomes the primary payer of medical benefits; the group policy becomes the secondary payer.
3. Enroll in Medicare and discontinue employer coverage. People who make this move either found that Medicare offered better coverage and/or Medicare benefits cost less than their employer plans.
Before making a decision, do your homework to determine which move is best for your situation. Seek advice from trusted professionals who can help you navigate the benefits with or without Medicare. Depending on the coverage of the employee policy versus Medicare, you may find the latter works better for you on its own.
Are you lucky enough to be employed by a company whose policies extend past the age of 65? Then, read on. The information below lists your alternatives and the benefits each present.
Possibilities to Consider When Comparing Medicare and Employer Healthcare Plan Benefits
- Stay on your employer’s plan and delay Medicare enrollment. This saves the cost of a Medicare premium. But, out-of-pocket expenses can be substantial depending on plan coverage and your health.
- Enroll in Medicare Part A and keep your employer plan as supplemental insurance. Part A is free. In this case, if you are hospitalized, Medicare pays first. Depending on your employer’s plan, they may cover some of the Part A deductible. (Note: If you have an HSA and a high-deductible employer group health plan, this option’s out. Once you enroll in Part A, you’re no longer able to make contributions to an HSA. Also, if you’re part of a group plan that insures fewer than 20 employees, you have to drop the HSA and enroll in Medicare.)
- Evaluate out-of-pocket drug expenses under your current plan. Run the numbers, and see if Part A and Part D provide a better drug plan. You can keep your employer plan as supplemental insurance. (Note: You must enroll in Part A in order to enroll in Part D.) Also, understand that if you do not have a qualified prescription drug plan and you do not enroll in Part D, you are subject to a late enrollment penalty when you finally do enroll. That penalty is calculated by multiplying 1 percent of the "national base beneficiary premium" ($35.63 in 2017) by the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.
- Enroll in Parts A, B, and D and keep your employer’s policy as supplemental insurance. To help make this decision, do the math to determine if it’s worth the cost per month based on how much you may use it.
- Decline your employer’s coverage and enroll in Parts A and B. You can get a stand-alone Part D drug plan and a Medigap policy or a Medicare Advantage plan that includes drug coverage.
In the scenarios listed above, (excluding the last one), coordinate with your employer’s insurer to make sure you get the best supplemental plan for your needs. You may find the open market for Medigap or a Medicare Advantage plan provides better coverage than your employer’s—at a lower cost.
Your final decision depends on your unique situation. Ultimately, you are the only person who can decide what choice is best for you. No one has a crystal ball to predict the future. But, you should have an idea—based on your health history—that indicates what your future needs may be as you age.
Just keep in mind, your employer or the insurance company can discontinue coverage at any time. If this happens, don’t panic! You are entitled to a special enrollment period for Medicare. You (and/or a covered spouse) have up to 8 months after group coverage ends to enroll without late penalties.
With that being said, if your employer’s insurance company does allow this continued coverage, enjoy it! The fact that you have choices here is exciting because many today don’t have that luxury when it comes to health care.