WHAT TO DO WITH MEDICARE WHEN YOU WORK PAST 65?

Today, an increasing number of Medicare eligibles are working past their 65th birthday.

KEY TAKEAWAYS

If you’re over age 65 and aren’t ready to retire, you may need to make an important decision. Should you keep your employer-sponsored health coverage, or enroll in Medicare?

Whether to enroll in Medicare when turning 65 or delay enrollment to a later date is determined by your employer size.

We recommend contacting us and speaking with an independent licensed Medicare Agent to help you with your particular situation. Each person’s situation is different. It’s best to get personalized Medicare Guidance if you are working past 65.

MEDICARE BASICS

Because Medicare works very differently from employer health insurance, there are lots of things to learn. If you continue to work after reaching age 65, you technically become eligible for Medicare. You may or may not want to enroll right away.

Here’s the dilemma: Your employer must continue to cover all eligible workers, regardless of age, under its group health insurance. Yet Medicare is telling you to sign up now.

It may not be clear that you only need to sign up for Medicare once—generally, at the point when your employer group coverage is ending¹. So here’s the 2-part general rule for when to join Medicare:

1. Enroll during your Initial Enrollment Period (IEP)—generally, 3 months before to 3 months after the month you turn age 65². Do so only if…
2. You also lose access to your employer group health insurance coverage.¹

If you don’t enroll during your IEP because you have employer group health insurance coverage, you can enroll at any time you still have employer group coverage. You can also enroll within 8 months after the month your employment or group coverage ends. (This 8-month window is called a Special Enrollment Period, or SEP.) Note that if your employer has fewer than 20 employees, you will not receive this SEP. You’ll need to know what your coverage options will be at age 65 and adjust your Medicare enrollment to meet your needs.

MEDICARE GUIDELINES WHEN TURNING 65

If you receive group health benefits through your own employment or your spouse’s employment, here are the guidelines to be applied when turning 65.

One other situation that can cause confusion occurs if you leave your job with a “retiree” health care plan or coverage under COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985). Neither of these health insurance options is considered employer group health insurance coverage, because they’re not based on current employment. You would be classified as a “former worker.” In this case, you would need to enroll in Medicare during your IEP, or Initial Enrollment Period.

Who pays first?

As with many laws and regulations, the devil is in the details. In the case of health insurance, you need to know who the “primary payer” is. This party is responsible for paying your medical bills first and covering the majority of the costs.

• If, when you turned 65, you were still working and were covered through a plan other than an employer’s plan (e.g., a retiree health care plan or COBRA), then Medicare is the primary payer of your health care expenses.
• If, when you turned 65, you were still working and were covered through an employer’s plan, then the employer’s insurance is the primary payer.
• If, before you turned 65, you stopped working and were covered through a retiree health care plan or COBRA, such plans are the primary payer until you turn 65.

As mentioned earlier, if you work for an employer with fewer than 20 employees, you need to enroll in Medicare at age 65 during your IEP. Medicare becomes the primary payer and your employer’s insurance becomes secondary.

There is a lot to keep track of: enrollment deadlines, health care coverage options, and possible penalties to avoid. But with some planning and homework, you can avoid the common pitfalls if you continue to work beyond age 65.

Coordinate the timing of your 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. This process ensures your coverage will be in place on the first month of your retirement. Otherwise, you may have a gap in health insurance coverage. This could leave 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. However, 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). 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.

Filling out the necessary forms

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. You can contact us for these forms.

Purchase a Medicare Supplement (Medigap) Policy during your Open Enrollment Period

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. However, generally, you then become subject to medical underwriting. As a result, the insurance company can decline to sell you a policy or can charge you more.

In other situations, a Medicare Advantage plan is another option. Its best to talk to a Medicare expert about all your options.

Key Takeaways –

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 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. Coordinate the timing between your employer plan and Medicare.

When navigating the ins and outs of Medicare when you work past 65, what you need to do will depend on many factors. That’s why it’s important to seek an experienced Independent Medicare expert to help you.

Need help? Talk to a local Medicare Agent to help you. We’re here to help!

You can call us at 888-808-7646 to talk to an experienced licensed Medicare Agent. They will navigate the various steps with Medicare when you work past 65.