Most people become eligible for Medicare at age 65, which is also the traditional age of retirement. However, some American seniors are choosing to work past the age of 65 and some are retiring early.1
This article looks at several scenarios to help you better understand your health insurance options whether you retire at 65, retire before 65, or keep working past the age of 65.
Retiring Before 65
Generally, you are not eligible for Medicare before you turn 65, even if you retire early. Some people may qualify for Medicare before the age of 65 if they are receiving disability benefits from Social Security or the Railroad Retirement Board or have a qualifying medical condition such as end stage renal disease.
If you retire before the age of 65 and have insurance through your employer’s group health insurance plan, find out whether you will lose those benefits when you retire.
If you retire earlier than age 65 and lose your group health insurance coverage, you could enroll in a private insurance plan until you are eligible to enroll in Medicare. Once you enroll in Medicare, you can drop your private plan.
Retiring at Age 65
Some people are automatically enrolled in Original Medicare at age 65 if they’ve already been receiving Social Security or Railroad Retirement Board retirement benefits for four months.
If you aren’t automatically enrolled, you can manually enroll during your Medicare Initial Enrollment Period, which begins three months before your 65th birthday, includes your birthday month and ends three months after your 65th birthday.
You can manually enroll in Medicare by:
- Visiting your local Social Security office
- Calling Social Security at 1-800-772-1213 (TTY users 1-800-0778), Monday through Friday 7AM-7PM
- Visiting the Social Security website at www.SocialSecurity.gov
Working Past the Age of 65
If you decide to work past the age of 65, it is important for you to know your rights regarding your health insurance coverage.
If you work for a company with more than 20 people, your employer cannot:
- Require you to enroll in Medicare once you turn 65 if you’re still employed full time
- Offer you a different kind of insurance than employees who are younger than you
If you work for a company with fewer than 20 people, your employer may require you to enroll in Medicare Part B at the age of 65.
If you don’t retire at age 65, speak with your company’s HR department to learn how your company handles group health insurance for people over the age of 65.
Some companies allow people over the age of 65 to remain on their group plan. If you stay on your employer’s group health insurance plan, you may still decide to enroll in Original Medicare when you turn 65. If you are, refer to the information below to find out how your Medicare benefits could work with your group coverage.
Medicare Part A
Most people do not pay a premium for Medicare Part A, as long as they paid sufficient Medicare taxes while working. If you still have group coverage through your employer and you enroll in Original Medicare, your Part A coverage will not affect your group coverage.
Medicare Part B
Medicare Part B requires you to pay a monthly premium for your Part B benefits. In 2019, the standard Part B premium is around $135.50 per month.2
If you still have group coverage through your employer and enroll in Original Medicare, you can opt out of Part B until you retire to avoid paying for benefits you won’t be using. Once you retire, you should qualify for a Medicare Special Enrollment Period, which will allow you to enroll in Part B outside of your Initial Enrollment Period, likely without having to pay late enrollment penalties.
Medicare Part D
Medicare Prescription Drug Plans (Medicare Part D) cover some prescription drug costs. Most prescription drugs are not covered under Original Medicare.
In addition to your Part B premium, you typically pay a premium for your Part D benefits. If you do not enroll in a Part D plan when you’re first eligible, you may have to pay a late enrollment penalty unless you have confirmation of creditable coverage (such as a group health insurance plan that covers prescription drugs).
Once you retire and enroll in Medicare Part B, you should be eligible to enroll in a Part D plan without facing late enrollment penalties.
Medicare Supplement Insurance
There are some out-of-pocket expenses you should expect to pay for your Medicare benefits, including deductibles, coinsurance and copayments.
Medicare Supplement Insurance (Medigap) helps cover some of the out-of-pocket costs of Medicare Part A and Part B.
There are 10 standardized Medigap plans to choose from in most states, labeled A, B, C, D, G, G, K, L, M and N.
All 10 Medigap plans provide at least partial coverage for:
- Medicare Part A coinsurance and hospital costs
- Medicare Part B coinsurance or copayment
- First three pints of blood
- Medicare Part A hospice care coinsurance or copayment
In addition to those four basic benefits, Medicare Supplement Insurance plans may offer different combinations of up to five additional benefits, which include:
- Coinsurance for skilled nursing facility
- Medicare Part A deductible
- Medicare Part b deductible
- Medicare Part B excess charge
- Foreign travel emergency costs
The best time to enroll in Medigap is during your six-month Medigap Open Enrollment Period, which begins the first day of the month in which you are 65 years or older and enrolled in Medicare Part B.
If you are still covered by your employer’s group health insurance plan and postpone enrolling in Medicare Part B, your Medigap Open Enrollment Period will begin once you are enrolled in Medicare Part B.
If you enroll in Part B while you’re still covered by your group health insurance plan, your six-month Medigap Open Enrollment Period will begin as soon as you’re enrolled in Part B and 65 years of age or older. If you do not enroll in a Medigap plan during this six-month period, you could be denied coverage or charged a higher amount if you decide to enroll in a Medigap plan later.
Since you must pay a Part B premium and a Medigap premium, we suggest waiting to enroll in Part B until you lose your group coverage. When you lose your group coverage and enroll in Medicare Part B, your Medigap Open Enrollment Period will begin and you can sign up for Medicare Supplement Insurance at the lowest rates.
Speak With a Licensed Insurance Agent
A licensed insurance agent can help you better understand your Medicare options whether you have retired or are planning to retire.
1 Bureau of Labor Statistics, “Labor Force Statistics from the Current Population Survey,” Published January 19, 2018
2 Medicare.gov, 2019 “Medicare Costs at a Glance”
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