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Refreshing Insights

Approximately 20 percent of Americans over age 65—a total of 10.6 million people—were either working or looking for work as of February 2019, and that number is likely to rise in the wake of the COVID-19 pandemic.

In the United States, 65 years old has long been considered retirement age, but between the highest unemployment numbers on record and an uncertain stock market slump, many Americans who had been considering retirement may need to work longer than anticipated.

We get a lot of questions about how Medicare works, and with more Americans choosing to work past 65, many of these inquiries concern employment and how it impacts Medicare eligibility and coverages.

For an explanation of Medicare options, please see our blog “What You Need to Know About Medicare and How to Sign Up.”

If you are nearing age 65 and you plan to continue working for a few more years, the following FAQs should help you determine next steps.

Am I required to sign up for Medicare as soon as I turn 65 years old?

There are specific timeframes for registering for Medicare. Enrollment begins three months prior to the month you turn 65 and ends three months after the month you turn 65—essentially a seven-month window.

Normally if you fail to sign up during the initial window, you end up paying a penalty (lifelong Part B premium surcharges) for enrolling late.

This penalty doesn’t apply, however, if you are enrolled in a group health plan through your employer (or your spouse’s employer) when you turn 65.

When you remain on an employer health plan, you will have an eight-month special enrollment period to sign up for Medicare that starts the month after you leave your job or the month after your group health coverage ends—whichever event happens first.

Which group health plans allow me to delay Medicare enrollment?

There are several criteria that an employer group health plan needs to meet to be eligible for the eight-month special enrollment period.

  • Your employer (or your spouse’s employer) must employ 20 or more people.
  • The plan itself needs to meet compliance requirements with benefits equal to or greater than Medicare. Nearly all plans meet this requirement with the exception of a few high-deductible plans, but you will want to talk to your plan administrator to make sure.
  • You or your spouse must be currently employed. COBRA and retiree plans are not eligible.
May I choose to enroll in Medicare while I am still working?

Yes. Many people get confused about Medicare and Retirement (i.e. collecting Social Security benefits) because sign up for both benefits is handled at the Social Security office. You may enroll in Medicare as soon as you become eligible and you are not required to collect Social Security benefits at that time.

In some cases, it might be beneficial to go on Medicare because it could be better and cheaper than your current employer plan. You will want to look at your total coverage and consider what you are paying compared to what you would pay under Medicare. Make sure you consider premiums, coinsurance, deductibles and copays. Many people choose to come off their employer health plan because it doesn’t make sense to pay for extra benefits that they’re not using.

Some people choose a hybrid between Medicare and their employer plan, enrolling in premium-free Part A (hospital stays), but delaying part B (doctor’s visits) in favor of staying on an employer’s health plan. In this scenario, the employer health plan serves as primary insurance and Medicare serves as secondary insurance for hospital bills.

Can I enroll in Medicare if I have a health savings account?

A health savings account (HSA) is a way to set aside tax-free dollars to spend on healthcare costs. Unlike a flexible spending account (FSA), an HSA doesn’t need to be spent during a plan year. Instead, the funds can rollover from year to year, building a reserve specifically for medical expenses. Withdrawals are also tax-free so long as they’re used for qualified medical expenses.

Once you’re enrolled in Medicare, however, you’re no longer allowed to contribute to an HSA. You are not prevented from withdrawing funds from your HSA, but you will not be able to add to the funds once you sign up for Medicare. As such, some people who are actively contributing to an HSA will choose to delay all Medicare enrollment until full retirement.

Where can I go for help?

If you’re uncertain about which path is best for you, seek the help of someone who is experienced in unraveling the complex world of Medicare. McClone offers comprehensive Medicare services and we are here to talk through your individual needs. Reach out today to start the conversation.


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A collection of articles from the McClone team with the helpful knowledge and insights to ensure your organization is well protected.