Navigating Medicare while you or your spouse are still employed can seem daunting, but it doesn’t have to be. Many people assume that if they already have health insurance coverage through work, when they turn 65 they don’t need to worry about Medicare enrollment until retirement. But that’s not always the case.
The good news is that Medicare can work with your employer-sponsored health insurance — but you should review your employer’s benefits package and talk to your HR department to see how Medicare could affect your coverage. As you consider your options, let’s discuss some Medicare basics before we dig into the details.
Understanding Medicare Part A and Part B: What's covered?
Medicare is provided by the U.S. government and has two basic options. They are Medicare Part A and Part B, also known as Original Medicare.
- Medicare Part A is hospital insurance that helps cover the cost of inpatient care in hospitals, skilled nursing facilities, hospice care and home health care. You're automatically enrolled in Part A if you're already receiving Social Security benefits. Otherwise, you’ll need to enroll on your own. Most people receive premium-free Part A due to paying Medicare taxes while working.
- Medicare Part B is medical insurance that helps pay for doctor visits, outpatient care like rehab therapy and some preventative services. You’re eligible for Part B as soon as you become eligible for Part A, but Part B is voluntary and has a monthly premium. Many people with Part A also enroll in Part B to make sure their basic health needs are covered.
Group health plans: Your bridge to Medicare?
Working past 65? If you’re covered under an employer group health plan, you can usually delay signing up for Medicare Part A or Part B — if you meet the right conditions. If you have to pay premiums for Medicare Part A or Part B, the option to delay Medicare can save you money.
Should I sign up for Medicare Part A while employed?
Yes, you’ll usually want to enroll in Medicare Part A as soon as you’re eligible. Most likely you’ve paid enough into Medicare during your working years, so you can sign up for Part A without paying a premium. This is one reason enrollment is still encouraged if you’re employed. You may be able to delay Medicare Part A enrollment if you meet the proper conditions Opens in a New Window. See note 1
Should I sign up for Medicare Part B while employed?
There’s more to consider when it comes to Part B, but the bottom line is that if you’re properly covered under an employer-sponsored group plan you can delay enrollment, delaying the need to pay the Part B premium.
Generally, if you have health insurance through your employer, you can delay Medicare Part B enrollment until you stop working, and you won’t pay a late enrollment penalty. But be sure to check with your employer’s benefits coordinator. Some plans require you to sign up for Medicare Part A and Part B when you turn 65 or you might lose your job-based coverage. To learn more about how Medicare might work with your employer-sponsored insurance, go to medicare.gov Opens in a New Window. See note 1
What if I’m covered by my spouse’s insurance?
If you’re listed as a dependent under your spouse’s employer-provided health insurance, you have the same options you’d have if you were under a plan offered by your own employer:
- Enroll in Original Medicare when you turn 65.
- Enroll only in Medicare Part A when you turn 65.
- Delay Medicare until you lose your current coverage.
Deciding when to enroll: Weighing your options
To enroll, or not to enroll? That’s a question you may be asking yourself as you approach your Medicare enrollment decision while still covered under a group plan. On one hand, you may be eligible to delay without facing a late enrollment penalty. On the other hand, you may be considering enrollment, so you don’t have to worry about gaps in coverage.
Benefits of enrollment: Avoiding a late enrollment penalty or gaps in coverage
Whether employed or not, enrolling in Medicare on time means you don’t have to worry about a late enrollment penalty or navigating the special enrollment period. It also makes sure that you have the coverage available to meet your needs. But it’s not always this cut and dry.
For example, if you’re continuing group coverage past the age of 65, you must take certain steps when that group plan is a high deductible health plan with a health savings account, or HSA. Most notably, you must stop your HSA contributions at least six months prior to Medicare enrollment past the age of 65. Reach out to your human resources department for more information.
Special enrollment periods: Navigating job changes and coverage gaps
If you delayed signing up for Medicare because you were covered by an employer-provided plan, you can qualify for a special enrollment period if you lose that coverage, which could happen if you or your spouse switch jobs or leave an employer. In this scenario, you have eight months to enroll in Medicare (or add Part B to your existing Part A), starting the month after employment or your insurance coverage ends, whichever comes first. Your Medicare coverage will start the first day of the month after you enroll.
Usually if you had credible coverage, you won’t have to pay a late enrollment penalty if you sign up for Medicare during a special enrollment period — but it doesn’t apply if you’re eligible for Medicare due to end-stage renal failure or if you’re still in your initial enrollment period, which is a seven-month period that begins three months before you turn 65.
Making your choice: Resources and next steps
At the end of the day, you need to find the best coverage to meet your health insurance needs and your budget. Compare Medicare plans to determine whether Original Medicare or an alternative works best for you. It can help to look up the cost under Medicare of any prescription drugs you take to help determine whether you need Medicare Part D or a Medicare Advantage plan that includes drug coverage. You should also compare the premium costs. Planning and understanding the various costs related to Medicare can help in your decision-making process.
Whether you’re new to Medicare or thinking about adding supplemental coverage, USAA recommends speaking with an insurance professional. They specialize in walking you through the various options that may apply to your needs.