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Medicare Considerations When You Are Still Working

Can I Enroll in Medicare While I’m Still Working?
Workers who are nearing age 65 and have health insurance through their job may want to consider how Medicare could factor into their medical coverage.

Many seniors are working beyond 65 years of age, and they may not need Medicare at that time.  Although not everyone is required to enroll in Medicare at the age of eligibility, many people must do so or risk lifelong late-enrollment penalties. Beck, Lenox & Stolzer Estate Planning and Elder Law, LLC recommends reading this article on Medicare considerations when you are still working.

CNBC’s article entitled “If you’re still working when you turn 65, be sure to avoid costly mistakes with Medicare” says the biggest mistake is to believe that you don’t need Medicare and to miss enrolling in it when the time comes.

Approximately 10 million workers are in the 65-and-older group, or 17.9% of that age group, according to the Bureau of Labor Statistics. The general rule for Medicare enrollment is that unless you satisfy an exception, you are allowed a seven-month enrollment window that begins three months prior to your 65th birthday month and ends three months after it.

One of the Medicare considerations when you are still working is, do you have qualifying insurance with your employer?  If you do, this is an exception to the requirement to enroll in Medicare.

Original, or basic, Medicare includes Part A (hospital coverage) and Part B (outpatient care coverage). Part A doesn’t have a premium, provided you have at least a 10-year work history of contributing to the program through payroll (or self-employment) taxes. Part B has a standard monthly premium of $148.50 for 2021, although higher-income beneficiaries pay more through monthly adjustments. About half (43%) of individuals opt to get their Parts A and B benefits delivered through an Advantage Plan (Part C), which typically includes prescription drugs (Part D). It may have a premium.

The rest go with basic Medicare and may pair it with a Medigap policy and a stand-alone Part D plan. Note that higher-income beneficiaries also pay more for drug coverage.

It’s crucial to understand that late-enrollment penalties last a lifetime. For Part B, the surcharge is 10% for each 12-month period you could’ve had it but didn’t sign up. For Part D, the penalty is 1% of the base premium ($33.06 in 2021) multiplied by the number of full, uncovered months you didn’t have Part D or creditable coverage.

The general rule for workers at companies with at least 20 employees is that you can delay your enrollment in Medicare, until you lose your group insurance (when you retire). Many people with large group health insurance wait with Part B but sign up for Part A because it’s free. It also doesn’t hurt you to have it. However, if you have a health savings account and a high-deductible health plan through your employer, you can’t make contributions after you enroll in Medicare, even if only in Part A.

If you remain with your current coverage and delay all or parts of Medicare, make certain that the plan is considered qualifying coverage for both Parts B and D. If you’re unclear if you need to enroll, ask your human resources department or your insurance carrier to confirm.

However, some 65-year-olds with younger spouses also might want to keep their group plan. Unlike your company’s option, spouses are required to qualify on their own for Medicare, regardless of your own eligibility.

If you have health insurance through a company with fewer than 20 employees, you should sign up for Medicare at 65, whether or not you stay on the employer plan. If you do choose to remain on it, Medicare is your primary insurance. However, it may be more cost-effective in that scenario to quit your employer coverage and purchase a Medigap and a Part D plan (or alternatively, an Advantage Plan,) rather than keeping the work plan as secondary insurance.

Workers at small companies frequently pay more in premiums than employees at larger firms. The average premium for single coverage through employer-sponsored health insurance is $7,470, research shows. However, employees contribute an average of $1,243 — or about 17% — with their company covering the remainder. At small firms, the employee’s share might also be far higher.

Beck, Lenox & Stolzer advises you to consult with an experienced insurance agent who sells Medicare plans and can help you evaluate Medicare considerations when you are still working.

Reference: CNBC (July 22, 2021) “If you’re still working when you turn 65, be sure to avoid costly mistakes with Medicare”


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