Approaching age 65 is an important milestone — in your life and in healthcare coverage. If, like millions of older Americans, you, your spouse, or both are still working and enrolled in an employer (group) medical insurance plan, there are critical decisions to weigh now to avoid financial penalties or gaps in coverage later.
Part A
Many people enroll in Medicare Part A (hospital insurance) at 65 because it’s usually premium-free. However, if you’re contributing to a Health Savings Account (HSA), enrolling in any part of Medicare means you can no longer contribute to your HSA. That’s an important planning detail to review.
Part B
If you’re covered by an employer plan (yours or your spouse’s), you may be able to delay Medicare Part B without penalty if the employer has 20 or more employees. However, if you do enroll and stay on the employer plan, the employer plan usually pays first, and Medicare would pay second. If the employer has fewer than 20 employees, Medicare generally becomes primary at age 65, and delaying Part B enrollment could lead to coverage gaps or penalties.
When You Retire
If one spouse over age 65 retires and loses employer coverage, that spouse may qualify for an 8-month Special Enrollment Period (SEP) to sign up for Medicare Part A or B without penalty. The SEP starts the month after employment ends or employer coverage ceases, whichever comes first. There is also a 2-month (63-day) window to join Part D or Medicare Advantage drug plan. Critical factors:
- You must enroll during this time to avoid steep penalties
- COBRA and Retiree Coverage do not count as current coverage. The SEP clock starts counting down when you stop working or regular employee coverage ceases.
How an Expert Can Help
While working and planning your transition to retirement, there are numerous complex questions to consider:
- How much does the employer plan cost compared to Medicare?
- Are your doctors and prescriptions covered the same way?
- Do you travel often or live in more than one state?
- Are you coordinating coverage for a spouse?
- What is your projected financial situation and healthcare usage over the coming years?
Everyone’s needs and goals are a little different. Addressing these questions now can make the transition smooth and stress-free. Let us guide you into the next phase with a strong plan for Medicare enrollment.
| Resources: cms.gov; medicare.gov; ssa.gov |