Working Past 65? This Medicare Mistake Could Cost You Big

Turning 65 is a milestone, but it also brings a flood of questions about Medicare. If you're still working and covered by an employer health plan, figuring out how Medicare interacts with your current insurance can feel like a daunting task. One of the biggest concerns we hear from our clients at Lexah Insurance is: "Will I get penalized if I don't sign up for Medicare right away?"

The short answer is: it depends. And understanding the "depends" is crucial to avoiding costly penalties and making the right healthcare decisions for you and your family. 

Let's break down how Medicare works with your employer coverage, and how to ensure you're making informed choices.

Medicare and Your Employer Health Plan: The Key Considerations

The primary factor determining how Medicare interacts with your employer plan is the size of your company.

• Large Employers (20+ Employees): If you work for a company with 20 or more employees, your employer's group health plan is generally considered the primary payer. This means your employer plan pays your medical bills first, and Medicare becomes the secondary payer, covering some or all of the remaining costs for services Medicare covers.

  • Key Takeaway: In this scenario, you may be able to delay enrolling in Medicare Part B (medical insurance) without penalty, as long as your employer's plan provides creditable coverage. However, you will want to enroll in Medicare Part A. This is because it is premium-free for most people and helps cover inpatient costs that would come out of pocket if you only had your employer coverage.

• Small Employers (Less than 20 Employees): For smaller companies, Medicare generally becomes the primary payer. Your employer's plan then becomes secondary.

  • Key Takeaway: If you work for a small employer and are eligible for Medicare, it's usually essential to enroll in Medicare Parts A and B when you're first eligible to avoid potential gaps in coverage and late enrollment penalties.

The Dependent Dilemma: What About Family Members on Your Plan?

This is a common concern, especially for those with spouses or children under 65 who are covered under your employer's health plan. Staying on your employer's plan to maintain coverage for your dependents is a valid consideration. Here's what you need to know:

• Medicare doesn't cover dependents: Medicare is an individual health insurance program. Your Medicare coverage only applies to you. Your dependents will need their own health insurance coverage.

• Employer plans may increase premiums: Some employer plans may increase your premium if you enroll in Medicare, due to having to cover your dependents.

• Shop around for coverage for your dependents: If you enroll in Medicare, you should shop around to find an individual health plan for any of your dependents who are currently covered under your employer plan.

• Need help finding coverage for your dependents? At Lexah Insurance, we can help you shop for individual or family health insurance plans to cover your dependents who are not eligible for Medicare. We can compare plans from different insurance companies and find the best fit for their needs and budget. Contact us today for a free consultation!

Understanding Creditable Coverage: Avoiding Part D Penalties

If your employer or union provides prescription drug coverage, it's crucial to determine if that coverage is considered "creditable" by Medicare. Creditable coverage means the plan's drug benefits are at least as good as Medicare Part D.

• How to find out: Your employer or union is required to notify you each year whether your prescription drug coverage is creditable. They'll send you a notice, usually in the fall.

• Why it matters: If you have creditable coverage, you can delay enrolling in Medicare Part D without incurring a late enrollment penalty. However, if your coverage isn't creditable, you should enroll in Part D when you're first eligible for Medicare to avoid lifelong penalties.

Don't Wait! Download Our FREE Guide: "The Ultimate Guide to Avoiding Medicare Penalties"

Navigating Medicare's rules and regulations can be tricky, especially when you're still working and have other insurance options. To help you make informed decisions and avoid costly penalties, we've created a comprehensive guide that explains:

• Late Enrollment Penalties for Parts A, B, and D

• Income-Related Monthly Adjustment Amount (IRMAA) surcharges

• How to determine if your employer coverage is creditable

• Strategies for maximizing your coverage while minimizing cost

Read the Ultimate Guide to Medicare Penalties

Beyond the Basics: Other Insurance Considerations

• Retiree Health Plans: If you have retiree health coverage from a former employer, Medicare usually pays first. Your retiree plan then covers some or all of the remaining costs.

• COBRA: COBRA coverage is generally not considered creditable coverage for Medicare Part D purposes. If you're on COBRA when you become eligible for Medicare, you should enroll in Medicare to avoid penalties.

Taking the Next Steps

Medicare is a complex beast with many moving parts, that take a long time to understand.   The information here is for informational purposes only and is not definitive or absolute. Because laws and rules surrounding Medicare and insurance can change frequently, we recommend you:

• Consult with your current employer benefits administrator: They can provide details about your specific employer plan and how it coordinates with Medicare.

• Contact Medicare directly: Medicare's website (Medicare.gov) and phone line (1-800-MEDICARE) are valuable resources.

• Talk to a Licensed Insurance Professional: At Lexah Insurance, we specialize in helping individuals navigate the complexities of Medicare. We can assess your specific situation, answer your questions, and help you find the right coverage options. We are not connected with the government or any government agency. To speak with a licensed agent, call us at 404-225-6331 or visit our website at www.LexahInsurance.com

Disclaimer: I Sarah Christly am an independent insurance broker. I am not affiliated with the government or the Medicare program. I offer Medicare plans from a variety of insurance companies. I am currently licensed to sell insurance in AL, AR, AZ, CO, CT, FL, GA, IA, LA, ME, MI, MN, MS, NC, NM, OH, SC, TN, TX, WA. As a licensed agent, I am committed to providing accurate information and helping you find the best Medicare coverage for your needs.