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Switching to MedicareIf You Work Past 65

Senior man in a sport coat looking down at a tablet in his hands.

Follow these 5 steps when switching to Medicare from employer health insurance:

  1. Start planning before you turn 65 — even if you want to work past 65.
  2. Decide whether your employer coverage is still right for you.
  3. Decide when to sign up for Original Medicare.
  4. Plan to stop contributing to a health savings account.
  5. Get the right additional coverage.

If you plan to work past 65, you can enroll in Medicare Part A and Medicare Part B (Original Medicare) when you become eligible.  Or you may be able to delay enrollment and remain on your employer health plan. When you retire, you will have a chance to enroll in Medicare Part A and B with no late enrollment penalty.

Switching to Medicare. How and when?

Let’s look at the basics of switching to Medicare smoothly. If you enroll in Original Medicare while still covered by an employer plan, Medicare and employer insurance will work together. One will be the primary payer, and the other will be the secondary payer. After medical services are received, the primary insurance will pay out first. Then, the secondary payer will cover some, if not all, of the remaining costs.

So what can happen to you if you don’t make a smooth transition from employer coverage to Medicare? Three things.

  1. You could have insufficient coverage for a time. That could be a problem if you get sick.
  2. You might have to pay late enrollment penalties. We’ll show you how to avoid late fees.
  3. A family member covered by your current plan could have insufficient coverage. Medicare is for individuals only. If you need coverage for a spouse or children, you should probably stay with your employer’s plan.

Fortunately, you can avoid these mistakes by following these five steps.

Start planning before turning 65.

The best time to plan enrollment in Medicare Parts A and B is when you are about to turn 65. That’s when most people first become eligible. But you may qualify for Medicare before age 65 if you become disabled or are diagnosed with certain health conditions.

The Initial Enrollment Period is a seven-month period. It starts three months before you turn 65 and ends three months after your birth month. If you start planning at 66, you may have already missed your best opportunity for the lowest possible premium and uninterrupted coverage.

Make sure you have coverage every month.
If you delay signing up for Medicare Parts A and B, you should make sure you have health insurance coverage every month. If you go even a single month without coverage, it can complicate your transition to Medicare later.

Decide whether your employer group coverage is still right for you.

Just because you have the option to delay enrolling in Original Medicare doesn’t mean it’s a good idea. Medicare may offer a greater choice of plan options. And it may cost less than your employer coverage. For instance, if you have a high-deductible employer plan, you may be better off with Medicare Advantage.

As for prescription drug coverage, your employer is required to tell you if your plan is “creditable.” If it is, you can delay getting drug coverage from Medicare.

You can use Healthpilot to help you decide between Medicare and your employer plan for medical and prescription drug coverage. First, find the right Medicare plan for your healthcare needs on Healthpilot. Then compare the plan benefits and costs you see on Healthpilot to those of your employer plan. For help understanding plan benefits, talk to one of our expert co-pilots.

Decide when to sign up for Original Medicare. 

When should you enroll? It depends which part of Original Medicare we’re talking about, Medicare Part A or Part B.

Medicare Part A: Sign up as soon as you’re eligible.
Medicare Part A covers hospitalization. If you worked and paid FICA taxes for at least ten years, you won’t have to pay a premium for Medicare Part A. So there is no reason not to sign up — even if you plan to work past 65.

Medicare Part B: It depends on the size of the employer (and your needs).
Medicare Part B covers doctor visits, outpatient services and various other costs. Most people must pay a premium for Medicare Part B. But that doesn’t mean you should try to avoid the Part B premium by staying with your employer’s plan. The key to whether you should consider delaying enrollment in Part B is the number of employees at your workplace.

Fewer than 20 employees? Sign up for Part A and Part B at 65.
If you work at a company with fewer than 20 employees, you should consider signing up for Medicare Part A and Part B when you first become eligible.

In this case, Medicare is the primary payer.
When you work for a company with fewer than 20 employees, Medicare is the primary payer. Your employer plan is the secondary payer. Your employer plan may require you to obtain Medicare Part B. Without Part B, claims that would have been billed first to Medicare will be billed to the employer plan. But your employer plan can refuse to pay, leaving you to pay all or most of the cost. Enrolling during the Initial Enrollment Period also secures the lowest possible Part B premium.

20 or more employees? It could be better to delay Part B.
If your employer has 20 or more employees, you can stay on your employer plan and avoid the Part B premium for now. Just make sure your employer coverage is really better for you before you decide to delay Part B.

Having two forms of insurance.
If you decide to enroll in Original Medicare, there will probably be a time when you have both forms of insurance. Because your company has 20 or more employees, the employer coverage will generally be the primary payer. Medicare will be the secondary payer.

The Special Enrollment Period.
What happens when you are ready to enroll? You will want to switch to Medicare when you retire during your Special Enrollment Period (SEP). This is an eight-month period that starts the month after employer coverage ends. To enroll in Part B, you will need to complete form CMS-40B. Meanwhile, your employer will have to complete form CMS-L564. It is best to enroll earlier during the SEP. Furthermore, it’s a good idea to keep records of your health insurance coverage. That’s because if your employer is unable to complete form CMS-LF564 for any reason, you will need to prove you had employer group coverage while you were delaying enrollment in Part B.

What if you miss it?
Be aware that if you miss your Special Enrollment Period, you can be assessed a late penalty. Additionally, you will have to wait for the General Enrollment Period, which occurs annually from January through March.  If you enroll in Medicare Part A or B during the General Enrollment Period, your coverage will not be effective until July 1. As a result, you may not have enough coverage until that date.

IRMAA surcharge on Part B and Part D.
The Income Related Monthly Adjustment Amount (IRMAA) is a surcharge based on your income. It is added to your monthly Medicare Part B and Part D premiums. The Social Security Administration determines whether you must pay this surcharge and how much it will be. To do this, they use the income reported on your tax filing two years before enrollment.

Plan to stop contributing to a Health Savings Account.

Once you enroll in Original Medicare, you are not allowed to contribute to a Health Savings Account (HSA). If you do, you will incur a tax penalty. You may want to stop contributing to your HSA about six months before you plan to sign up for Medicare Part A. You can use the funds you’ve saved for health expenses for the next six months and even after you join Medicare.

Get the right additional coverage.

After you enroll in Original Medicare, you can consider a Medicare Advantage Plan, Medicare Supplement Insurance (Medigap) or a Medicare Part D Prescription Drug Plan. Fortunately, Healthpilot will search available plans in your area to find the right plan for your specific needs. Then you can enroll right on Healthpilot. Your new plan could save you thousands of dollars compared to Original Medicare.

Medicare Advantage Plans
Also known as Medicare Part C, Medicare Advantage is an “all in one” alternative to Original Medicare. This includes coverage from Medicare-approved private insurance companies. Medicare Advantage offers all the services covered under Part A  and Part B. It may also include Medicare Part D prescription drug coverage, as well as extra benefits like routine dental and vision care.

Medigap works alongside Medicare Parts A and B. It helps pay your share of medical expenses like co-pays, deductibles, and coinsurance. These policies are offered by private insurance companies to supplement Original Medicare coverage. Some Medigap policies also cover care when traveling outside the U.S.

Part D Prescription Drug Plans
Medicare Part D plans cover prescription drugs. These are optional and offered to everyone with Medicare. They are available as a stand-alone plan or bundled with a Medicare Advantage Plan.

Enroll once your Medicare Part B goes into effect.
You can enroll in a Medicare Advantage Plan, Medigap, or Medicare Part D Prescription Drug Plan as soon as your Medicare Part B coverage goes into effect.

  • Not delaying Part B? Enroll in Medicare Advantage or Medicare Part D during your Initial Enrollment Period.
  • If you delay enrolling in Part D and choose to leave your employer group coverage, you will have two months after the month your coverage ends to sign up.
  • The best time to enroll in a Medigap policy is during the Medigap Open Enrollment Period (OEP). This starts when your Medicare Part B coverage goes into effect and ends six months later.

Let Healthpilot find you the right plan. 

Healthpilot will find the right Medicare plan for your needs in about fifteen minutes. It’s free, easy, and secure. And at any time, you can get help from our co-pilots. These licensed insurance brokers do not favor any plan or carrier — they work only for you.

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