Still Working at 65? What You Need to Know About Signing Up for Medicare

Still Working at 65? What You Need to Know About Signing Up for Medicare

Whether you work at age 65 or not, you will still be eligible for Medicare coverage. However, registration for Medicare is not compulsory. In fact, you may prefer to stick to health care coverage offered by your company instead. However, with the choice of not signing up as you become eligible comes a penalty.

Indeed, everyone’s preferences vary. However, the wise decision is to consider the size of your organization and the value you get from your workplace health coverage before finally deciding whether to sign up for Medicare or not. 

Here’s more about Medicare sign-up and non-retirement.

Benefits of Getting Medicare While Working

Part A

Part A is the portion of Medicare that covers the hospital coverage. This includes services such as:

  • Inpatient hospital care and mental health services
  • Inpatient rehabilitation services
  • Hospice care
  • Limited home health care
  • Limited stays in a skilled nursing facility

If you qualify for Medicare Part A, there is minimal downside associated with its enrollment. In addition, you may easily become eligible for Part A if you have paid into Medicare through payroll taxes for at least ten years of employment.

If you work for a large employer with more than 20 employees, a Medicare policy can act as a secondary payer and help fill gaps in your current coverage at no additional cost on your end.

Enrolling in Medicare can help reduce your medical costs if you work for a small organization (less than 20 employees) or have an employer’s health insurance plan with less coverage.

In these cases, Medicare is often the primary payer and may provide better coverage than you currently receive. In fact, your small firm’s insurance may not cover you if they find that you are eligible for Medicare benefits and haven’t enrolled.

In many cases, it is better to apply for Medicare Part A when you become eligible, even if a group health plan covers you. It is because the delay in Part A registration may result in a penalty when you enroll in the future.

Part B

Medicare Part B is the portion of Medicare that provides medical insurance. In addition, you can use it to cover various outpatient services, such as:

  • Doctors’ appointments
  • Laboratory testing, such as urinalysis and blood tests
  • Vaccinations for hepatitis B, flu, and pneumococcal disease
  • Durable medical equipment like walkers, wheelchairs, and oxygen equipment
  • Occupational therapy and physical therapy
  • Outpatient hospital and mental health care
  • Other testings, such as imaging tests and echocardiograms

Medicare usually provides seven months around your eligibility date to apply. This is called your Initial Enrollment Period (IEP). For instance, you can apply for three months before your 65th birthday, during your birthday, and three months after that.

In many cases, you’ll need to register on time to avoid paying the late enrollment penalty for your Medicare Part B premiums. However, you may qualify for an 8-month Special Enrollment Period (SEP) if you or your spouse is employed when you become eligible. 

You can retain your existing group health plan for as long as possible during a Special Enrollment Period. In the case of leaving that employer or the employer terminates your coverage, you get an eight-month window to enroll in Medicare without paying any late penalties.

Signing Up for Medicare Part A Before Your Retirement

  • If you are 65 and still employed and not claiming Social Security benefits, the government won’t automatically enroll you in Medicare Part A, covering hospital stays.
  • If you work for an organization with twenty or more employees and are already enrolled in your company’s health insurance plan, you do not need to register in Part A.
  • If your employer pays most of your premiums, has low deductibles, and you aren’t eligible for non-premium Part A, it justifies relying solely on your workplace coverage.
  • If you qualify for non-premium Part A — as most people do because they have paid Medicare taxes throughout their working years — you can also sign up. You’ve earned it! Like secondary health insurance, Part A may cover hospital costs that your employer’s plan does not cover.
  • If you work for an employer having fewer than 20 employees, you must enroll in Part A as soon as you qualify. Medicare will be your primary payer in that case.
  • If you are covered by a health insurance marketplace plan or COBRA, you must register for Medicare Part A during your IEP or Initial Enrollment Period. IEP begins three months before you turn 65, including your birthday month, and ends three months after you turn 65.
  • Please note that Part A premium penalties apply if you are not eligible for non-premium Part A and do not register when you first qualify.

Signing Up for Medicare Part B Before Your Retirement

  • If you are still working at age 65 and haven’t claimed Social Security benefits yet, the government will not enroll you in Medicare Part B automatically.
  • If you work for fewer than 20 employees, you must enroll in Part B as soon as you qualify. Medicare will be your primary payer.
  • If you work for a company with 20 or more employees and are enrolled with your employer’s health insurance plan, you do not need to register in Part B. You might not want to do this because it is not free.

Notably, the monthly premium for 2020 was $145. In 2021, it is $148.50 if you make up to $87,000 as a single income tax filer. Thus, premiums increase in tiers at higher income levels.

However, you should make sure that your workplace coverage meets the IRS definition of group coverage. You will want to get a written answer from your employer. If not, you should register in Part B to avoid paying the premium penalty levied for not registering in Part B within eight months of becoming eligible.

  • If you already have Part B but don’t need it because you have group coverage, you can contact Medicare to unregister.
  • If a marketplace plan covers you, a private plan, or COBRA, you should register for Medicare Part B during your Initial Enrollment Period (IEP) to avoid unnecessary penalties.

Notably, you can’t contribute to a health savings account after you enroll in Medicare.

Sign Up for Medicare Part D at 65 Before Your Retirement

  • To ensure you have prescription medication coverage, you have three options to choose from. (i) Reliable prescription drug coverage from work, (ii) Medicare Advantage plan with drug coverage, or (iii) Medicare Part D.
  • You can ask your employer whether your workplace prescription coverage is as good as or better than Part D.
  • You could lose your workplace prescription coverage if you register for Part D, and you will not be able to get it back.
  • If you do not have any prescription coverage and don’t enroll in Part D on time, you’ll pay higher Part D premiums.

Final Verdict

Unless you’re claiming Social Security benefits, you won’t automatically be enrolled in Medicare at age 65. But since you haven’t retired yet, you may not be claiming those benefits, and you’ll need to proactively choose which parts of Medicare you want to enroll in and when.

The people who have paid Medicare taxes throughout their working years can enroll in Part A free of cost; it usually makes sense to enroll, even if you have good health insurance through work. However, the decision to register in Part B and D is less straightforward, and you need to know whether your workplace insurance meets specific requirements before proceeding.

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