Do You Need Medicare If You Continue To Work After 65?
Even as you begin to contemplate retirement, many people do not fully let go of their day job the moment they turn 65. Some find a part-time opportunity, and others devote their working hours to volunteering. According to Census data, from 2014 to 2018, almost 26% of Americans ages 65-74 were employed, so what does that mean for your health insurance and Medicare?
Having health insurance from your employer after 65 might not always be the best solution. When you turn 65, It is important to take the time to explore all your options. I’ve talked with many individuals who never took the time to compare their employer group coverage with what Medicare could provide them and later regretted it. Many told me that since they were still provided employer group insurance, which was automatically deducted from their wages, they left everything status quo. This decision can impact you not just financially but also with undue stress later due to additional paperwork.
When talking to someone turning 65 who was still employed and could continue with their employer group coverage, there were always two questions I would ask them right away. How they answered these two questions would help me better determine which health insurance option was the better choice for their situation.
Having a dependent not yet eligible for Medicare could make the employer group coverage a better option. This is because the dependent would more than likely lose the employer group coverage, and their insurance could be more costly on the individual marketplace. Also, if someone is taking high-cost, brand-name medication, their employer group might provide more comprehensive benefits than Medicare’s prescription drug plan.
For those with no dependents or high-cost medications, Medicare could be a better option. However, before you make any major decisions about whether to keep Medicare, you should consult with your company’s HR department and speak to a Medicare insurance agent.
Monthly price is an important factor, as well. You can calculate the baseline for your monthly insurance costs by looking at deductions on your paycheck. Medicare is straightforward when it comes to the cost of its basic coverage. Part A, which covers hospital expenses, is free for most people. Part B, which covers medical expenses like doctor’s visits, lab tests and outpatient care, has a monthly premium of $148.50. This is the standard Medicare premium most individuals will pay unless they make more than $88,000 per year. Then the monthly premium will be higher, which would be a factor in making your decision.
If you are looking to use Medicare, you have the option to add a Medicare Advantage plan to the basic coverage. These are alternative plans to Medicare provided by private insurance companies that can offer additional benefits such as prescription, vision, dental, hearing and more once you no longer have employer insurance. Many of these plans are offered with no additional monthly premium other than the Part B premium of $148.50. This alone could be more cost-effective than keeping your employer group coverage.
Those wanting to keep Medicare as their primary insurance can also consider a Medicare Supplement, also referred to as a Medigap Supplement plan, along with a stand-alone prescription Part D plan. These will come with separate monthly premiums but help cover what Medicare will not. Adding up all these options, you may find that Medicare provides better coverage than your employer’s plan.
While your insurance premium is not the only cost you will have, it is one of the easiest to budget for. A qualified Medicare insurance agent can walk you through the other costs associated with all the Medicare plans, such as copays, deductibles, etc., to help you determine what the insurance will really cost you.
The size of the company you work for also factors into whether Medicare is a better choice for coverage. At small companies with fewer than 20 employees, you will be required to take your Medicare benefits. For companies with more than 20 employees, you can wait to take your Medicare benefits, but that could mean a lot of paperwork down the road.
Enrolling in Medicare as soon as you turn 65 will mean less paperwork and no penalties. This is the ideal time to enroll, called the Initial Enrollment Period (IEP). This starts three months before you turn 65 and includes your birthday month and the three months after that. Enrolling within this period means you will not need any documentation. This is easier than dealing with the paperwork after the fact.
If you enroll in Medicare after this period, you may be eligible for a Special Enrollment Period (SEP) that starts three months before you need your coverage to start and lasts for eight months after your last day of work. You will be required to submit paperwork to Medicare from your employer.
If you cannot provide this documentation, that will mean extra fees. Unless you’re covered by group insurance, you can incur a 10% penalty for each year you delayed your Medicare after you’re eligible. Not only that, but you will have to wait for the General Enrollment Period (GEP), which takes place January 1 though March 31 each year, but coverage will not start until July.
If you are still working past 65, it is best to explore all your options. If you are not ready to retire, reach out to the health insurance liaison in your office and your human resources department. For Medicare-specific information, working with an insurance agent who is well versed in the confusing aspects of Medicare can be a big plus. Turning 65 does not mean you have to retire. It also does not mean you have to settle for one specific type of health insurance.