Working past age 65? Learn your Medicare options.
An overview of Medicare
Whether or not you are working when you turn age 65, you are eligible for Medicare coverage. Medicare is a federal health insurance program option for U.S. citizens and permanent residents age 65 and older, as well as younger people with qualifying disabilities or end-stage renal disease.
It has four parts covering different services:
- Part A: inpatient/hospital coverage
- Part B: outpatient/medical coverage
- Part C (Medicare Advantage): private health insurance option that replaces Parts A and B
- Part D: prescription drug coverage
Costs for each part of Medicare vary, but you are often eligible for free Medicare Part A if you are age 65 or older and either you or your spouse paid Medicare payroll taxes for at least 10 years while employed. Should you not qualify for free Part A, there is a full or discounted premium you pay each month, depending on how long you or your spouse paid into Medicare payroll taxes.
Medicare Parts B, C and D have individual monthly premiums that you pay.
Enrollment in Medicare is not automatic. If you receive Social Security or Railroad Retirement Board (RRB) benefits, you are automatically enrolled in Medicare Parts A and B starting the first day of the month you turn age 65. Should your birthday occur on the first of the month, your Medicare coverage begins the first day of the month before your 65 birthday.
Anyone who does not get Social Security or RRB benefits when turning age 65 will need to enroll in Medicare on your own during your initial enrollment period.
Initial enrollment period when working
Whether or not you choose to keep working, you have a seven-month initial enrollment period that begins three months before turning age 65, plus your birthday month and the three following months. During this time, you typically need to enroll in Medicare to avoid a lifetime late enrollment penalty for Part B, unless you have other creditable coverage.
Medicare and employer coverage
Medicare has varying rules for which insurance company pays for health care costs first (primary) if you also have employer coverage, and it depends on the number of employees at your place of work.
If you work for an employer with fewer than 20 employees or receive tribal self-insurance, Medicare becomes your primary health insurance coverage.
If you work for an employer with 20 or more employees, Medicare will pay secondary.
If you continue to work after age 65 and have employer coverage, you can choose either to delay Medicare and continue with employer coverage, enroll in Medicare (and/or other Medicare options, such as a Medicare Advantage plan), or have a combination of both Medicare and employer coverage.
For a no-cost comparison, contact your local insurance agent for help determining which option is best for your unique situation.
If you receive coverage through a spouse’s employer, you may be able to delay coverage or you may need to enroll in Medicare at age 65. This depends on the employer’s policy. Anyone who can get coverage through your spouse’s employer can choose to enroll in both Medicare and employer coverage through your spouse.
Special enrollment period when retiring
Should you retire or lose your employer coverage after age 65, you have an eight-month special enrollment period to join Medicare Parts A and B. However, you only have two months from your retirement date or loss of coverage to enroll in Parts C and D.
COBRA coverage considerations
After losing a job or experiencing reduced work hours, some people who qualify for Medicare may consider signing up for COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage. COBRA is a health insurance program that gives eligible employees and dependents the option to continue health care coverage due to:
- The loss of a job
- Reduced work hours resulting in no longer qualifying for employer coverage
It is important to sign up for Medicare when you are eligible and not wait until after your COBRA coverage ends. You may not qualify for a special enrollment period when COBRA ends, meaning you must wait until the next general enrollment period to join. You may also have to pay a lifetime late enrollment penalty for Part B.