What to Do About Medicare If You Are Still Working in 2019

These days, more seniors are continuing to work well past 65, the age of Medicare eligibility. With longer life expectancies and jobs that are less physically demanding today, you might even be planning to work well in your 70's. If you do plan to work after you reach retirement age, here's what you should know about your Medicare coverage.

Do I have to sign up for Medicare?

The answer depends on the size of your employer. There are laws in place prohibiting larger employers (those with at least 20 employees) from offering older employees different health benefits than those they offer everyone else. In other words, it's your choice, not your employer's, whether to continue with your employer coverage or enroll in Medicare.

If you work for a small employer with fewer than 20 employees, the employer decides whether to discontinue your group health coverage once you become eligible for Medicare. If your company's policy is to make Medicare the primary insurer for employees age 65 and over, you must enroll in both parts of Original Medicare or face several unpleasant and costly consequences.

First, even if your employer allows you to stay on the group health plan after age 65, your group plan becomes the secondary insurer. That means that it will only pay after Medicare, the primary insurer, pays its share. If you don't have Medicare, your group plan isn't obligated to pay anything toward your medical expenses.

Second, if you don't enroll in Medicare, and your group plan is secondary, you technically do not have health insurance for purposes of Medicare's late enrollment penalty. In other words, when you do enroll in Medicare, you'll pay a penalty based on the number of months you went without insurance coverage when you could have enrolled in Medicare—and you'll pay that penalty for as long as you have coverage.

If you work for a larger employer and you have the choice between Medicare and your group plan, it's a good idea to compare premiums, deductibles, and coverage, and determine which option makes most sense financially. Most people, however, do decide to keep their Part A as soon as they become eligible, since most people qualify for premium-free Part A.

What about Part D coverage for prescription drugs?

Although Part D is considered optional, the law requires you to have "creditable" prescription drug coverage if you choose to forgo Part D. If you don't, and you go without prescription drug coverage for 63 or more consecutive days, you'll pay a late enrollment penalty with your Part D premium.

Most employer plans have coverage that is equal to or better than Part D, which is considered "creditable" for purposes of the law. Your insurance company is required to send you a letter letting you know whether your coverage satisfies Medicare's requirements. If it doesn't, you should enroll in Part D as soon as you become eligible. If it does, be sure to keep proof of creditable coverage in a safe place in case you are hit with a late enrollment penalty when you do enroll.

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What if I want a Medicare Supplement Plan?

If you do delay Medicare enrollment because you are still working after age 65, you will still have guaranteed issue rights for Medigap when your employer coverage ends.

Note that if you use COBRA to continue your employer coverage after you leave your job, it does not count as insurance coverage from active employment for the purposes of avoiding late enrollment penalties with Medicare. COBRA also doesn't protect your guaranteed issue rights for Medigap. Your open enrollment period for Medigap begins on the date you leave your employment or the date that your employer coverage ends.