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July 5, 2022
If you work at a larger company (20 employees or more), you can delay Medicare enrollment without penalty when you become eligible. However, if you work at a smaller company (fewer than 20 employees), Medicare becomes the primary insurance, which means enrollment in Original Medicare is necessary for health insurance coverage.
With more than 25% of those 65 and older still working, turning 65 no longer means retiring and enrolling in Medicare. This raises the question of if you do qualify for Medicare, do you have to take it even if you’re still employed? Can you be forced by your employer to enroll in Medicare? The answer depends on the size of the company you work for, and whether or not Medicare would be a primary or secondary insurance. (Of course, no employer can force an employee to do anything, including signing up for Medicare.)
If you’re turning or have already turned 65 and are eligible for Medicare but still working, it can help to understand your options and ensure you have the healthcare coverage you need when you need it.
Whether you must enroll in Medicare when you’re eligible or face late penalties depends on the size of the company sponsoring the group health plan. In addition, the employed person (you or your spouse) must be actively employed. If the group health insurance is through a retirement plan, Medicare is always the primary payer.
If you work for a company that has more than 20 employees, the company must offer the same health insurance coverage to those who are 65 and older as it does to younger employees. This means the company cannot force you to enroll in Medicare even when you are eligible or offer incentives for you to do so.
You may:
If you delay enrollment in Medicare, you must sign up for Part A and Part B when your employment ends or the group plan coverage stops; otherwise, you face late penalties when you enroll later. When employer coverage ends, you have a Special Enrollment Period of up to 8 months to sign up for Medicare.
Note that you can’t delay Medicare enrollment without penalty if your employer-sponsored coverage comes from retiree benefits or COBRA, as these do not count as active employment. It also doesn’t count if you work beyond age 65 but receive retiree benefits from a former employer. You or your spouse must be actively working for the employer that provides your health insurance in order to delay Medicare enrollment without owing the late penalty.
If you choose to sign up for Medicare and have employer coverage that is primary, you will have to pay the Medicare Part B premium of $170.10 per month (in 2022). Of course, your out-of-pocket costs will be minimal (and may be zero). Whether that’s worth the monthly premium depends on your unique situation.
However, we nearly always recommend applying for Medicare Part A if you qualify for premium-free. The only exception is if you contribute to a health savings account (HSA). You may not contribute to a health savings account and have any part of Medicare. If you have an HSA and plan to sign up for Medicare when you turn 65, talk to your benefits administrator.
If you work for a company with fewer than 20 employees, the group health plan sponsored by your employer becomes the secondary payer when you become eligible for Medicare, making Medicare the primary payer.
When Medicare is the primary payer, your employer-sponsored plan only pays whatever is owed after Medicare pays its share. Typically, this amounts to 80% of the Medicare-approved amount for a particular service. If you don’t sign up for Medicare, your employer plan would pay its 20%, leaving you responsible for what should have been Medicare’s 80%. That’s why we encourage people to enroll in Part A and Part B when they’re eligible.
In this case, you have two options:
It’s important to talk to your benefits administrator about plan-specific details. For example, in some cases, your employer can choose to cancel your workplace plan instead of keeping it as a secondary payer. In that event, you might decide you want to sign up for a Medigap supplement plan as soon as you’re eligible, or maybe switch Medicare Advantage instead. Understanding the rules at your employer helps you make those decisions.
As discussed above, if you turn 65 and are still working, you need to understand whether employer coverage or Medicare is primary or secondary. Primary coverage pays for eligible claims first, and secondary coverage helps pay the remaining amount.
Yes, you can have Medicare and employer insurance. When deciding which health insurance option is best for you, consider asking your employer plan provider the following questions:
To learn more about how income from employment may impact Medicare premiums, and actions Medicare-eligible employees can take when they turn 65, contact the Social Security Administration (SSA) and/or the Centers for Medicare & Medicaid Services (CMS).
Medicare is not mandatory when you turn 65, though whether you must pay a late enrollment penalty when you do sign up depends on a number of circumstances.
However, if your employer is large enough, you can keep your group health coverage until you retire and enroll in Parts A and B later without having to pay a penalty.
In most cases, you should enroll in Medicare when you first become eligible. This is called your Initial Enrollment Period. It lasts through the 3 months before the month you turn 65, the month you turn 65, and the 3 months after your birthday month.
However, if you have eligible group health coverage when you become eligible for Medicare, you can delay enrollment in Medicare without facing a penalty as long as you have primary employer group health coverage.
You must also have creditable drug coverage, or you must enroll in Medicare Part D. Otherwise, you could face a late enrollment penalty.
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