Turning 65 with Employer Insurance: Should You Stay on Your Work Plan or Enroll in Medicare?

Frequently Asked Questions

Can I delay Medicare Enrollment if I have employer coverage?

Yes, if your employer has 20 or more employees, you can delay Medicare Part B without penalty. However, you should confirm with your HR department that your plan qualifies as "creditable coverage"​​.

What happens if I lose my employer coverage?

If your employer coverage ends, you qualify for a Special Enrollment Period (SEP), which lets you sign up for Medicare without penalties​.

Is it better to choose Medicare or keep my employer insurance?

This depends on your specific health needs and finances. Compare monthly premiums, out-of-pocket costs, provider networks, and any additional benefits to decide​​.

What is "creditable coverage"?

Creditable coverage is any prescription drug coverage that is at least as good as Medicare Part D. If your employer plan doesn’t meet this standard, you may need to enroll in Part D to avoid future penalties​​.

Can my spouse stay on my employer plan if I switch to Medicare?

Yes, in many cases, your spouse can remain on the employer plan. Check with your HR department to confirm how this works with your specific policy​.

This means that if your employer has fewer than 20 employees, you must enroll in Medicare to avoid a late enrollment penalty.

This article explains your options if your employer has over 20 employees. If your employer has fewer than 20, follow the same enrollment steps as those without work health insurance.

Turning 65 and deciding whether to keep employer insurance or enroll in Medicare is a common scenario.

If you or your spouse are still working and covered by an employer with more than 20 full-time employees, you have options.

Here’s what you need to know to make the best choice for your health and budget.

Step 1 Understand Your Eligibility and Options

When you turn 65, you become eligible for Medicare. However, if you’re covered by an employer’s health plan from a company with more than 20 employees, you don’t need to enroll in Medicare Part B right away.

You can delay Part B without facing late penalties as long as you’re covered by a qualified employer plan​.

If you decide to delay Medicare enrollment, you’ll want to be mindful of your Special Enrollment Period (SEP). This is a specific timeframe when you can sign up for Medicare without penalties after your employment or employer coverage ends. Knowing you have this flexibility can give you peace of mind as you evaluate your options​.

Step 2 Compare Coverage and Costs

To make an informed decision, it’s helpful to compare what Medicare covers versus what your employer plan provides.

Here are some essential points to consider:

• Medicare Part A: Covers hospital-related expenses, such as inpatient stays, skilled nursing, and hospice care. Most people don’t pay a premium for Part A if they or their spouse have paid Medicare taxes long enough​.

  • Their is a deductible and or coinsurance copays when admitted to the hospital and you will want to compare these.

    
    

• Medicare Part B: Covers doctor visits, outpatient care, and preventive services. However, Part B has a standard monthly premium, which is $174.70 in 2024. Some people may pay more depending on their income​.

  • Similarly outpatient care that Part B covers has deductibles, copays, and coinsurances to compare to your employer plan.

  
  

Out-of-pocket Costs:

Consider the deductibles, copayments, and coinsurance for each plan. Original Medicare typically covers 80% of approved costs for Part B services, leaving you responsible for the remaining 20%. Your employer plan might have different cost-sharing requirements, or potentially a large deductible that you won't find with most Medicare plans.

Comparing these details can give you a clearer sense of your potential out-of-pocket costs​.

Decision Tip: Calculate your estimated expenses under each plan to see which option offers better financial protection for your medical needs.

Step 3: Learn about Medigap and Medicare Advantage to make the best informed decision

• Medicare Supplement Insurance (Medigap):

  • This private insurance plan helps cover costs that Original Medicare doesn’t, such as copayments, coinsurance, and deductibles. Medigap plans are ideal if you want extra financial protection without switching to a full Medicare Advantage plan​.

    
    

• Medicare Advantage (Part C):

  • Medicare Advantage combines Parts A and B into one plan, often adding benefits like dental, vision, and even prescription drug coverage. These plans are offered by private insurers and may provide extra coverage beyond Original Medicare​.

    
    

Decision Tip: If you prefer straightforward, nationwide provider access, Medigap may suit you. If you want bundled coverage and some extra benefits, Medicare Advantage could be a better fit.

Step 4: Check Prescription Drug Coverage (Part D)

Original Medicare doesn’t cover prescription drugs, so you’ll need a Part D prescription drug plan. It’s essential to enroll in Part D during your Initial Enrollment Period to avoid a late enrollment penalty later, unless your employer plan offers creditable prescription coverage (meaning it’s as good as or better than Medicare Part D)​.

Decision Tip: Confirm with your employer if your plan’s drug coverage is creditable. If it’s not, you may want to enroll in Part D to avoid future penalties.

Step 5: Consider Other Factors in Your Decision

Beyond cost and coverage, here are a few other points to consider:

• Family Coverage: If your employer plan covers a spouse or dependents, it may be worth keeping for their benefit. Medicare doesn’t cover spouses, so switching could mean they’d need separate coverage.

  
  

• Provider Access and Flexibility: Medicare allows more flexibility in choosing providers, while some employer plans may have network restrictions. Consider if you value the freedom to choose doctors nationwide that Medicare offers​.

  
  

• Special Enrollment Period (SEP): If you decide to stay on your employer’s plan now, remember that you’ll have an SEP to join Medicare Part B later without penalty. This period starts once you lose employer coverage or stop working, whichever comes first​.

  
  

Next Steps: Take Action Based on Your Choice

After comparing your options, take action based on what fits your health and budget best.

If you decide to keep the employer plan: Confirm that your employer plan is creditable, and mark your SEP for future Medicare enrollment.

If you decide to enroll in Medicare: Sign up for Parts A and B during your Initial Enrollment Period and consider adding Medigap, Medicare Advantage, or Part D if needed to manage your out-of-pocket costs.

Taking the time to compare Medicare with your employer insurance can lead to better financial and health outcomes. Whichever choice you make, understanding your options and knowing when to enroll in Medicare will keep you covered and prepared for the future. For further details, Medicare.gov and the "Medicare & You" handbook are excellent resources for personalized support​​.

Key Terms and Definitions

• Creditable Coverage: Health coverage that is at least as comprehensive as Medicare Part D. If your current plan is creditable, you can delay Part D without penalty​.

• Initial Enrollment Period (IEP): A seven-month window to enroll in Medicare starting three months before the month you turn 65, your birthday month, and ending three months after.

• Medigap: Supplemental insurance that helps cover costs not paid by Original Medicare, such as deductibles and copayments​.

• Medicare Advantage (Part C): Private insurance that combines Medicare Part A and Part B benefits, often with extra services like dental, vision, or prescription drug coverage​.

• Out-of-Pocket Costs: Expenses for medical care that aren’t reimbursed by insurance, such as deductibles, copayments, and coinsurance​.

• Special Enrollment Period (SEP): A time outside the usual enrollment periods when you can enroll in Medicare without penalties, usually triggered by specific life events like losing employer insurance​.