Still Working After 65? A Medicare Guide

April 7, 2015

by: The My Medicare Matters Team

Do you need Medicare if you are 65 or older and still working? Although you become qualified to enroll in Medicare three months before your 65th birthday, it may make more sense to delay enrolling in Medicare (and continue to use your employer’s health insurance plan) until you retire. Special Enrollment Periods allow most actively employed 65 year olds with employer healthcare coverage to delay enrollment in Parts A, B, C and D without incurring fines.

Additionally, some people hold on to their employer health insurance and also enroll in Medicare, because they assume they will pay fewer out-of-pocket expenses for their care with two policies. That’s not necessarily true.

There are a few key things to keep in mind when deciding whether to enroll in Medicare as soon as you become eligible, or delay enrollment until you retire:

  • First, you should know exactly when you are eligible to delay enrollment in Medicare and when you are not. If you or your spouse is still actively working for a company with at least 20 full-time employees AND you get health insurance and drug coverage through them, you are most likely eligible to delay enrollment in any of the parts of Medicare until you or your spouse retires—with a few exceptions. If your insurance is COBRA or through TRICARE, or if you work for a company with fewer than 20 employees, then you’ll probably want to join Medicare at age 65. Check out our “65 and Still Working” fact sheet for a detailed overview of what circumstances to consider when deciding whether to enroll—or delay enrollment—in any of the parts of Medicare.
  • Second, it is important to understand why you might want to delay enrollment in some or all of the parts of Medicare. For the majority of people (those with insurance through an employer with 20-plus employees) their employer health insurance will probably be the primary payer, and Medicare will probably be the secondary payer. As a secondary payer, Medicare will only pay your bill if your primary insurance (your employer health insurance) pays less than what Medicare would have paid if it were primary. Employer health insurance typically covers more of the cost than what Medicare would have covered, which results in Medicare making no payment. This means that you’re unlikely to see cost savings from having Medicare in addition to your employer’s plan.

Consider the following fictitious example. Your general practitioner bills $437 for an outpatient office visit. Your employer, Big Happy Company, has a generous health insurance policy, so the visit is discounted to $250—and they pay 100% of it. In this case, Big Happy Company’s health insurance plan serves as your primary payer. If Medicare were your primary form of health insurance, Medicare Part B would discount the visit to $200 (known as the Medicare Assignment amount) but would only pay 80% of it. Therefore, Medicare would cover $160 of the visit (80% of $200), and you would still owe the other $40 (known as the 20% coinsurance). If you had BOTH forms of coverage, Medicare would pay nothing because Big Happy Company’s insurance plan (the primary payer) already paid the full $250.

With this example, it is clear that it can be more cost-effective to retain your employer health insurance rather than switching to Medicare when you turn 65, as your employer insurance will usually cover more of the cost than Medicare. It is also clear that it may be unnecessary to have Medicare in addition to your employer insurance, once more because your employer insurance will usually cover more of the cost than Medicare.

Overall, it may make the most sense to delay enrollment in Medicare until you retire. It might also make sense to enroll right away in some parts of Medicare and delay enrollment in other parts. For example, it might make sense to enroll in Part A when you first become eligible, because it is free for most people. However, given the monthly premium for Medicare Part B ($104.90 or higher per month), enrolling in Part B right away may not be worth the extra cost if your employer insurance already covers more of your medical costs than Medicare. It is important that you discuss all of your Medicare options with your employer in order to determine what makes the most sense for your particular situation.

For a more thorough overview of what circumstances to consider when deciding whether to enroll—or delay enrollment—in any of the parts of Medicare, check out our “65 and Still Working” fact sheet. For access to free professional advice and a more in-depth assessment of your situation, take the Medicare QuickCheck®. It’s also always a good idea to check with your current insurance company to determine how Medicare will work with it.

Next Steps

Take the Medicare Questionnaire or Visit SHIPs or Call Medicare.gov