Should you enroll in Medicare at 65 if you are still working?

Deciding to work past 65 can pose several questions concerning Medicare. Should I enroll at 65? Can I delay Medicare? Will I be penalized if I do?

Well, the answer is, it depends.

It depends on the size of your employer, the quality of the employer coverage you have, and whether you want extra benefits or not. Let’s look at the different scenarios to figure out if you should enroll in Medicare at 65 if you’re still working.

Medicare options when working for a large employer

A large employer has 20 or more employees. Large employer coverage is creditable coverage for Medicare. Therefore, if you work for a large employer, you’re able to delay all parts of Medicare until you retire without penalty.

However, you can have large employer coverage and Medicare if you’d like. For instance, since most people pay $0 per month for Part A, you can enroll in Part A at 65 to supplement your employer coverage for inpatient stays.

You can also enroll in Part B if you’d like. However, it’s not recommended since having Part B as secondary coverage usually isn’t cost efficient. Also, since you have to pay for Part B, it’s smart to delay Part B and save those premium payments.

On the other hand, if you contribute to a health savings account, you won’t want to enroll in any part of Medicare. If you are enrolled in any part of Medicare, you will not be able to contribute to a health savings account.

Medicare options when you have poor quality large employer coverage

Although you can delay Medicare until you retire when you have large employer coverage, you may not want to. Some employer plans have a high deductible or copays. If your employer coverage isn’t very good, you can choose to drop your employer coverage and enroll in Original Medicare with or without a Medicare plan.

When deciding which route is the most cost-effective, look at premiums, deductibles, copays, and other financial aspects for each type of coverage. Also, take into consideration how often you use your plan. For instance, if your employer coverage plan has a $5,000 deductible and 20% coinsurance, choosing Medicare over your employer coverage may be the more cost-effective option.

If you choose to drop your employer coverage, you will need to enroll in Part A, Part B, and Part D at 65 to avoid late enrollment penalties. You will also have the choice of enrolling in either a Medigap plan or Medicare Advantage plan. These plans help to lower out-of-pocket costs. Note, if you enroll in a Medicare Advantage plan, you likely won’t need to enroll in a Part D plan as most Medicare Advantage plans include a Part D plan.

Medicare options when working for a small employer

A small employer for Medicare purposes has fewer than 20 employees. Small employer coverage pays secondary to Medicare. Therefore, to avoid late penalties, you will need to enroll in Part A and Part B at 65. Your small employer coverage likely has creditable coverage for Medicare Part D. If it does, then you won’t need to enroll in Part D at 65.

But again, choosing straight Medicare over employer coverage may be the more cost-effective option. If you’d rather have Original Medicare and a Medigap plan, you can drop your employer coverage and enroll in all parts of Medicare.

There is no need to have employer coverage, Part A, Part B, and a Medicare plan. If you had all four of these, you would be over-covered and paying for more than you need.

So, the coverage options for someone working past 65 are:

• Large employer coverage
• Large employer coverage + Part A
• Small employer coverage + Part A + Part B
• Part A + Part B + Part D
• Part A + Part B + Part D + Medigap
• Medicare Advantage

Remember, examine all the aspects of your coverage options before deciding. Consider both financial aspects and quality aspects. Discuss with your HR department, which route might be the best for you at the moment.

Danielle Kunkle Roberts is a founding partner at Boomer Benefits and a Medicare Supplement Accredited Advisor. She and her team help thousands of baby boomers learn the ropes regarding Medicare every year.

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