5 Common Mistakes to steer clear of when working past 65

As more people continue to work beyond the age of 65, it’s important to navigate both the professional world and the complexities of Medicare with care. While staying in the workforce can offer financial and personal benefits, there are several common mistakes that can lead to unnecessary complications.

Among these are 5 common mistakes with Medicare for those working past 65. Whether it’s understanding Medicare coverage or managing your retirement plans, avoiding these pitfalls is crucial for maintaining both your health and financial security.

In this article, we’ll outline five key mistakes to steer clear of when working past 65 while balancing Medicare benefits.

1. Not doing your homework

If you plan to work past age 65, or if your spouse or partner continues to work and covers you, you’ve got some research to do to make sure you know your options, the costs, and any restrictions.

• Your employer is required to offer you coverage, but is that your best option?
• Is it more expensive to stay in your employer plan or join Medicare?
• Which plan offers you the best coverage for your health needs?
• Can your spouse or partner remain in your employer’s plan if you decide to leave?

Tip: Review your health benefits documents and schedule a call with your company’s HR or benefits group to discuss your insurance options. Read the information on Medicare.gov about working after age 65 and the coordination of benefits.

2. Failing to notify Social Security that you want to delay Medicare

If you enrolled in Social Security before your 65th birthday, you will be enrolled automatically in Medicare Parts A and B. However, if you are still covered by an employer’s health plan, you could be paying for 2 plans.

• Contact Social Security (in person, phone, or online) and explain that you do not want Part B at this time—that’s because Social Security manages the administration of Medicare. 
• If you automatically receive your Medicare card, you’ll need to follow the instructions that came with the card to cancel your Part B coverage. Generally, there is a short time frame of several weeks to return your Medicare card and cancel enrollment. 
• If you haven’t enrolled in Social Security by age 65, there is no automatic turn-on of your Medicare benefit—you just continue as an active employee, and you can enroll in Medicare and begin receiving Social Security benefits at a later date.

3. Enrolling in Medicare Part A, but losing the ability to contribute to your health savings account (HSA)

Many employees with access to HSAs have funded their accounts hoping that they could use their HSA dollars to pay for qualified medical expenses in their retirement.

But here’s the glitch: If you enroll in any part of Medicare, you lose the ability to continue contributions to your HSA. Some people who continue to work after age 65 decide to enroll only in Medicare Part A because they think it’s free and that it may provide some secondary insurance coverage in the event of hospitalization; however, this move may have unintended consequences.

If you have both employer health insurance and Medicare Part A, Medicare becomes the secondary payer. Medicare coverage typically kicks in after the employer’s insurance and covers unpaid expenses up to Medicare’s cost limit. In general, employer insurance pays more to health care providers and hospitals than Medicare, so you may not get any cost savings benefit by having both plans—and you’ve lost the ability to contribute to your HSA.

Tip: Decide which option is more important to you: the ability to continue to contribute to your HSA or enrolling in Medicare at age 65, because you cannot do both. When you enroll in Medicare after turning age 65, your actual coverage becomes effective up to 6 months earlier. Therefore, you’ll want to end contributions to your HSA at least 6 months prior to leaving your job. This will help you avoid a possible tax penalty for making ineligible contributions to your HSA after your Medicare coverage has kicked in.

4. Not coordinating the timing of you Part B with losing your employer group health plan coverage

As you leave your job, your health insurance generally terminates at the end of that month. It’s important to apply for Medicare a couple of months before you end employment so that your coverage will be in place on the first month of your retirement. Otherwise, you may have a gap in health insurance coverage leaving you fully responsible for paying any medical expenses you incur during this period.

For example, say you are age 68 and retire on March 15. The last day of your employer health coverage would be March 31. If you enrolled in Medicare in advance of your retirement, Medicare coverage would begin on April 1. If you wait until the month after you retire or later to enroll in Medicare, you will have a coverage gap. Your Medicare coverage could begin on May 1 or as late as December 1 (depending on when you enroll), and you would be responsible for paying any medical bills that you incur during those months without health care coverage.

What’s more, if you miss both your Medicare Initial Enrollment Period and Special Enrollment Period, you may need to pay penalties on top of your monthly premiums for as long as you have Medicare.

Tip: Fill out the appropriate Medicare forms to enroll in Part B as your employer coverage is ending (Forms CMS-40B and CMS-L564). Do so about 3 months before your last day on the job.

5. Missing the “open enrollment period” to buy a Medigap plan after employer health insurance ends

If you plan to travel abroad during retirement or want to keep your current doctors and specialists, it may make sense for you to buy supplemental insurance such as a Medigap policy. This is different from enrolling in Medicare. If you decide to do so, you’ll have 6 months to buy a Medigap plan without underwriting once you have enrolled in Part B and have been assigned your Part B number. You may be able to buy a Medigap plan after the open enrollment period, but generally, you then become subject to medical underwriting, and the insurance company can decline to sell you a policy or can charge you more.

Learning the ins and outs of Medicare and getting the timing just right is each individual’s responsibility. Do your homework, understand your options, ask for help if you need it, and make sure you receive confirmation of your enrollment.

Talking with an Independent licensed Medicare Agent in your area or your benefits department is one of the most important steps you can take if you are planning to work after age 65. You don’t want to be in a situation where you have a gap in your primary insurance coverage. Make sure you know how your health insurance will work after age 65, and coordinate the timing between your employer plan and Medicare.

Checklist: Medicare and working after age 65

Need help? Talk to a local Medicare Agent to help you. We’re here to help! Contact ML Health Insurance to talk to a licensed Medicare Agent.

• Read your employer health care benefits information specifically for employees or spouses who are reaching age 65.
• Talk to your company’s human resources or benefits group to confirm the status of your employment and access to health insurance.
• Explore the Medicare.gov website and order your Medicare and You book to give you the latest information.
• If you want to continue contributing to your HSA, decline Medicare Part A coverage.
• If you are already receiving Social Security before turning age 65, make sure to follow the instructions to decline Part B when you receive your Medicare card.
• When you are ready to retire or are losing your employer group coverage, sign up for Medicare 3 months before your last day of coverage.

While each person’s situation is different, its important to work with an experienced Independent Medicare Agent to help you navigate this process. The steps you take will be dependent on whether your employer has more than 20 employees or less than 20 employees. There are a series of questions an experienced Independent Medicare will ask you to help you navigate this process.

Contact ML Health Insurance for a no-cost consultation.