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Working Past 65

Working Past 65 | Medicare Pitfalls to Avoid

Your Medicare choices can vary if you’re planning to continue working after turning 65. In fact, you might even have the option to delay signing up for Medicare altogether. We’ll explore a few points to help you make informed choices and avoid common mistakes that could have long-term financial implications.

Do I Need to Enroll in Medicare Part B If I Already Have Health Insurance or Retirement Coverage?

Medicare can be confusing when it comes to knowing whether to enroll in Part B. And, given that the premium for Medicare Part B is around $175 per month as of 2024, it’s important to understand if enrolling is necessary to avoid unnecessary expenses.

To answer this question, you need to consider two main requirements outlined by Medicare:

𝟭 – You must have health insurance, specifically creditable coverage from an employer with 20 or more employees. You might still be able to delay Medicare enrollment, or you might need to enroll when you turn 65, even if your spouse’s employer has 20 or more employees. The reason? Employers can have their own rules for covering dependents. Some may require dependents of Medicare age (65 or older) to enroll in Medicare to maintain coverage under the employer’s plan.

In case this applies to you, reach out to your spouse’s employer’s benefits administrator for guidance.

𝟮 – Your employment needs to be ACTIVE, meaning it comes from your current job or your working spouse’s current job. In other words, ACTIVE employer coverage refers to your present employment situation. 𝗜𝗠𝗣𝗢𝗥𝗧𝗔𝗡𝗧: COBRA doesn’t count.

Note that if you have a retirement package, but you and your spouse are both retired, you must take Medicare Part B to avoid penalties.

You may be able to delay if …

The option to delay Medicare enrollment usually applies to people working for a company with 20 or more employees and having employer health coverage that meets Medicare’s “creditable” standards. What does that mean? Well, your employer’s health plan, including prescription drug coverage, must be as good as or better than what Medicare offers.

You may need to enroll at age 65 if …

On the flip side, people with health coverage from an employer with fewer than 20 employees must enroll in Medicare at age 65, or they could face late enrollment penalties later.

ACA Plans

Similar rules apply with Affordable Care Act (ACA) plans. While you can keep an ACA plan at 65, you lose tax subsidies and cost-sharing benefits. You’ll need to transition to Medicare for more cost-effective coverage.

Getting Medicare While Working

When taking Medicare while you’re still working, there are some crucial things to keep in mind:

1. Coordination with Employer Insurance | Group Plans vs. Medicare

For people with employer-provided plans (20 employees or more) who are not obligated to enroll in Medicare, you may want to compare costs. Premiums, deductibles, co-insurance, and max out-of-pocket expenses must be weighed to determine whether Medicare or the group plan is the more financially sound option.

Your Medicare benefits can seamlessly complement your employer-provided insurance. Medicare generally acts as the secondary insurer until you either retire or lose your employer’s coverage, whichever comes first. At that point, Medicare becomes your primary source of coverage.

2. Health Savings Accounts (HSAs)

If you enroll in any part of Medicare, you won’t be able to continue contributing to a Health Savings Account (HSA). This is an important consideration, especially if you’re eligible to delay Medicare enrollment and continue working. While Medicare Part A seems like a great choice since it’s often premium-free for most people, it might not align with your HSA contributions.

3. Coverage for Spouse and Children

Remember that Medicare won’t cover your spouse or children. If you choose Medicare and drop your employer’s coverage, you’ll need to talk to your employer’s benefits administrator to explore the options available for your family. Some employers will offer COBRA, so make sure you understand how this decision impacts your loved ones.

Final Thoughts

So, if you’re planning to work past 65, you’ve got options to consider when it comes to Medicare. It’s all about finding the path that suits your needs best. Understanding the nuances of group plans, ACA coverage, enrollment periods, and the potential for delayed Medicare entry is necessary. By making informed decisions about your Medicare coverage, you can sidestep common mistakes while continuing to work beyond the age of 65.

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