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We live in an age when people often work well past age 65 in America. This brings up a very important questions about Medicare and Employer coverage. Should you enroll in Medicare at age 65 when you are still working? Do you need both Parts A and B or can you enroll in just Part B?
These are tricky questions because the answers depend on the size of the employer that you are working for.
Medicare is secondary if you age 65 or older and your employer has more than 20 employees and you are still ACTIVELY working (not a retiree or on COBRA). This is called Medicare Secondary Payer. In this scenario, your group plan pays first, and then Medicare pays second. (People under 65 on Medicare, click here for different rules).
Most active employees with group coverage enroll in Part A because it is premium-free if you have worked at least ten years. Part A can coordinate to lower your costs if you have a hospital stay. For example, let’s say your employer health plan has a $3000 deductible. The Medicare Part A hospital deductible is $1364 in 2019. So if you have both your employer insurance and Part A, and you incur a bill for a hospital stay, you will only be out $1364. Medicare pays the rest of any Part A services.
It doesn’t necessarily work the same way with Part B and Part B costs money (see next section), so that’s why most people choose Part A only when working for a large employer.
One exception would be if you are contributing to an HSA account and plan to continue doing so. If that’s the case, do not enroll in Part A.
Now Part B is not premium-free. You will pay a monthly premium for Part B based on your income. Some people eligible for Medicare and employer group health coverage choose to delay enrolling in Medicare Part B and Part D while still covered on their group health coverage (or their spouse’s group health coverage).
This saves them the premiums they would have paid for those parts. Your employer coverage already includes outpatient benefits so it may not be worth it to pay those Part B and D premiums.
When you DO delay Part B, your large group plan is considered creditable coverage. That means that you can enroll in Part B later without late penalty when you decide to retire. Once you quit and leave the group plan, your insurance company will mail you a creditable coverage letter. Be sure you keep this. You will need it to show Medicare that you had other coverage so that you are not subject to late penalties for Parts B and D.
Medicare is primary if you are age 65 or older and your employer has less than 20 employees. You will need both Part A & B for sure because Medicare will pay first, and then your group insurance will pay secondary. Occasionally we see some insurance companies who will cover claims even if you don’t have Part B. Don’t buy it. You run the risk of that insurance company changing that at any time without warning, and leaving you stuck with all the expenses that Part B would normally cover. It’s not worth the risk – we advise always enrolling in Parts A & B if your employer has less than 20 employees and Medicare will be primary.
However, you may be able to delay enrolling in a Part D drug plan without penalty if your group plan has RX benefits, as most do. Be sure to compare costs. It is sometimes cheaper to leave the group insurance altogether and enroll in a Medicare supplement as your secondary instead.
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