Working With Medicare: When to Apply if You’re Not Ready to Retire

If you’re still working, you might be wondering what to do about Medicare. 

There’s so much confusing information out there. Do you risk penalties or miss out on benefits if you delay?

With all the mixed messaging around, it’s easy to feel lost — so let’s clear up the confusion and help you understand exactly what to do.

Should You Get Medicare if You’re Still Working at 65?

Many people who are still working at 65 choose to enroll in Medicare Part A only. 

Medicare Part A has a $0 premium for most people, and it can act as secondary insurance to provide benefits that your employer coverage might not. 

However, you may want to delay enrolling in Medicare Part B if your current employer coverage is considered creditable. Medicare Part B has a monthly premium, and its coverage typically overlaps with employer-sponsored coverage. 

Your eligibility for Medicare at 65 is not typically affected by your employment status. This means you can enroll in Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) as soon as you’re 65. 

However, how Medicare works with your existing employer health plan depends on the size of your employer.

If your employer has 20 or more employees, your employer’s plan will typically be the primary insurance for your health coverage. In this case, Medicare will be your secondary insurance and might help you with other costs that your employer plan does not.

On the other hand, if your employer has fewer than 20 employees, Medicare will generally be your primary insurance, and your employer’s health plan will fill in any gaps. 

It’s important to talk to your employer to understand how enrolling in Medicare might affect your current employee health plan coverage.

Benefits of Medicare vs. Employer’s Health Insurance Plan

Choosing between Medicare and your employer’s health insurance plan can be tricky.

Let’s review what each avenue looks like.

Employer’s Health Insurance Plan:

• More Coverage: Employer plans often have more coverage than Medicare, including benefits like dental and vision care, which Medicare does not typically cover.
• Cost Sharing: Many employer plans will share costs like co-pays and deductibles that might be more favorable than Medicare’s.
• Family Coverage: Employer plans usually cover family members, which Medicare does not.
• Potentially Pricier Premiums: Some employer plans might have higher premium costs, especially for larger companies.
• Limited Provider Networks: Employer plans often have network restrictions, which might limit your choice of doctors and hospitals.

Medicare:

• Wide Acceptance: Medicare is widely accepted by hospitals and doctors nationwide, typically giving patients extensive access to healthcare providers.
• Additional Coverage Options: With Medicare, you can enroll in a Medicare Supplement Plan (Medigap) or a Medicare Advantage Plan to reduce your out-of-pocket expenses

• Medicare Part B Premiums: Medicare is not free! Most people qualify for $0 premium Medicare Part A, but Medicare Part B has a monthly premium for most people. 
• Coverage Gaps: Medicare has gaps, such as no coverage for most dental, vision, or hearing services, which can result in additional out-of-pocket expenses.

Separate Prescription Drug Coverage: You’ll have to enroll in a separate Part D plan for prescription drugs, which can be an extra cost and another plan to manage.

When to Apply for Medicare if You’re Still Working: Enrollment Timing and Requirements

Understanding when to enroll in Medicare while you’re still employed can save you from unnecessary headaches and ensure you have coverage when you need it. 

Best Times to Enroll to Avoid Late Penalties

Medicare sets specific times to sign up to avoid late enrollment penalties:

Initial Enrollment Period (IEP)

This is a seven-month period that includes the three months before you turn 65, the month you turn 65, and the three months after you turn 65. You can enroll during this period if you do not have employer health coverage.

General Enrollment Period

If you miss the IEP, you can enroll between January 1 and March 31 each year. If you enroll during this period, your coverage will begin on the first day of the following month. However, this might involve late penalties.

Special Enrollment Period

If you’re still working at 65 and covered by an employer health insurance plan, you can enroll in Medicare during an Special Enrollment Period (SEP) if you qualify for one. 

If you qualify, an SEP lets you sign up for Medicare Part B anytime, as long as you’re still covered by a group health insurance plan through your current employment or your spouse’s current employment. 

Once employment or coverage ends, you also typically get an eight-month period to sign up without penalty.

This period is helpful if you wish to delay Medicare Part B enrollment because of your existing employer coverage. Enrolling during an SEP means you won’t face late enrollment penalties, and your coverage can start without delays, unlike with general enrollment periods.

How to Switch from Your Employer’s Health Plan To Medicare 

1. Understand Your Current Coverage

Before making any changes, fully understand what your current employer’s health insurance plan covers. 

This knowledge will help you determine what additional coverage you might need from Medicare.

Health needs and coverage options can change, so review your coverage each year to determine whether adjustments are needed.

2. Check Your Eligibility and Enrollment Periods:

Verify your eligibility for Medicare and identify your Initial Enrollment Period (IEP) or Special Enrollment Period (SEP) if you’re still working.

Always be aware of enrollment periods for Medicare and any changes in your employer’s health plan to adjust your coverage as necessary.

3. Decide Which Parts of Medicare You Need

Determine whether you need Medicare Part A, Medicare Part B, or both. 

• Medicare Part A (Hospital Insurance): Medicare Part A  usually has a $0 premium if you or your spouse paid Medicare taxes while working. (This part covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health care.) If you meet these conditions, you can enroll in Medicare Part A, as it provides coverage at no additional cost to you.
• Medicare Part B (Medical Insurance): Unlike Medicare Part A, Medicare Part B has a monthly premium. (Medicare Part B covers necessary medical services like doctors’ visits, outpatient care, medical supplies, and preventive services.) Consider Medicare Part B based on how it complements your current employer coverage. If your current coverage already provides outpatient services, you could potentially delay Medicare Part B enrollment to avoid the premium costs. However, if there are gaps in your employer’s plan, especially for outpatient care or medical supplies, Medicare Part B could cover these.

Weigh the costs of Medicare Part B premiums against costs you’re currently paying. Medicare Part B can particularly benefit those who need frequent medical care or whose employer coverage is limited.

4. Apply for Medicare

You can typically apply online at the Social Security website, over the phone, or in person at a Social Security office. 

Make sure to apply within your designated enrollment period to avoid any penalties.

5. Review Medicare Advantage or Medigap Options

If you need more coverage, consider a Medicare Advantage Plan or a Medigap policy. Compare these plans based on your health needs and budget.

These plans are offered by licensed insurance companies approved by Medicare and typically include all the benefits of Medicare Parts A and B, often with additional services like dental, vision, and hearing care—not typically covered by traditional Medicare. 

Many Medicare Advantage Plans also include prescription drug coverage (Medicare Part D). When considering a Medicare Advantage Plan, review the network of doctors and healthcare facilities, the costs of premiums, deductibles, the other out-of-pocket expenses, and the added benefits. 

It’s important to see if these plans align with your lifestyle and healthcare needs.

If you choose to stick with traditional Medicare, a Medigap policy can help cover some of the remaining healthcare costs that Medicare does not pay—such as copayments, coinsurance, and deductibles. 

Medigap policies are generally standard in most states. 

But remember, Medigap policies don’t include prescription drug coverage, so you may need to enroll in a separate Medicare Part D plan for drugs. Before choosing a Medigap policy, consider its monthly premium and how much it covers. Compare different policies to find one that fits your situation and fills the gaps in your Medicare coverage.

6. Coordinate Your Benefits

If you choose to keep your employer’s health insurance plan along with Medicare, contact your employer and Medicare to understand how the benefits will coordinate. This will help prevent any overlap or gaps in coverage.

Make sure all your healthcare providers know about both your Medicare and employer insurance so they can bill correctly.

Following these steps will help ensure a smooth transition from an employer’s health insurance plan to Medicare.

Common Questions and Expert Answers

What happens if I don’t sign up for Medicare at 65?

Delaying your Medicare Part B enrollment without having a group health insurance plan from your current employment could result in late enrollment penalties. 

These penalties are ongoing and can increase your premium by 10% for each 12-month period you were eligible but didn’t enroll.

Can I drop my employer insurance for Medicare?

You can choose to switch to Medicare from your employer’s insurance plan. 

Look at both plans closely to see which is more beneficial for your specific healthcare requirements.

Should I get Medicare Part D prescription drug coverage if I’m still working?

If your employer’s health insurance plan includes creditable prescription drug coverage, you generally don’t need Medicare Part D immediately. 

Make sure to confirm that your employer’s drug coverage is considered creditable. Not signing up for Medicare Part D when you don’t have creditable coverage can result in late penalties if you enroll later.

Make an Informed Decision For Better Health

Making the right Medicare decisions while you’re still employed can significantly affect your health coverage and financial well-being as you age. 

If you’re approaching 65 and still working, it’s time to evaluate Medicare. But that doesn’t necessarily mean it’s time to switch.

To ensure you make the best choices for your health and financial future, you can consult with a licensed insurance agent who can provide personalized advice and help you with Medicare enrollment. 

You can speak to one of our professional licensed insurance agents by clicking the button below, and we’ll help you decide if now is the right time to make the switch to Medicare: