Medicare

Working Past Age 65

Turning 65 and Continuing to Work? Medicare works a little differently…

If you are turning 65 and are enrolled in an employer group health plan based on your own or a spouse’s employment, you may be able to delay enrolling in Medicare when first eligible.

How to know if you should delay enrolling in Medicare or should sign up when you’re first eligible? There are several factors to consider. For starters

Company Size Matters

  • If you are enrolled in an employer group health plan with a company that has less than 20 employees, you should sign up for Part A & B when first eligible to avoid penalties.
  • If you are enrolled in an employer group health plan with a company that has more than 20 employees, you can sign up for Part A and Part B OR postpone Part A or Part B without penalties.

Why does the company size matter? By law, group health insurance plans offered by companies with over 20 employees are considered the “Primary Payer” (pays claims first) and Medicare as a “Secondary Payer” (except for employees with end-stage renal disease starting with the 31st month after the start of Medicare coverage, then Medicare pays first and the employer plan pays second). But group health insurance plans offered by companies with under 20 employees are considered the “Secondary Payer” and Medicare pays is the “Primary Payer”.

Other factors to consider about enrolling in Medicare while working:

  • Costs – This will vary depending on how much your employer contributes towards your premium, your income bracket (because Medicare charges higher premiums for those with higher incomes), as well as which Medicare insurance plans you choose. Check out Budgeting for Medicare to get an overview of the costs.
  • Plan Eligibility – Remaining covered on your group plan is tied to you continuing to work for your employer and cover a spouse and/or dependents on your plan.
  • Plan Options – Employers usually offer limited insurance carriers and a handful of plans to choose from whereas there are many more Medicare insurance plan options available.

If you continue working past 65 for a company with more than 20 employees, and stay on your employer’s group health plan, keep in mind that:

  • Most people qualify to get Part A without paying a monthly premium. If you qualify for premium free Part A, you can sign up for Part A coverage starting 3 months before you turn 65 and any time after you turn 65
  • If you have a Health Savings Account, you and your employer should stop contributing to it 6 months before you sign up for Part A (or apply to start getting Social Security benefits) to avoid a tax penalty.
    • If you are enrolled in an HSA compatible health plan through your employer and want to keep it, and your employer is > 20 employees, you should consider postponing enrollment into Part A
    • If you receive social security payments, you cannot opt out of Part A
  • You will have an opportunity to sign up for Medicare prior to retirement during a Medicare Special Enrollment Period without penalty. It is recommended to start the enrollment process with the Social Security Administration no later than three months before you plan to retire.

We recommend scheduling a personal consultation with a licensed BoomerBaby agent (there is no charge for this) to discuss your situation.