One of the big questions most people have is this: I am getting close to 65, but I am still employed and have insurance through my employer. What do I need to do?
Do I need to sign up for Medicare Part A and Part B? Unfortunately, like Medicare in general, there is no easy answer. Your employer insurance may look exactly the same after you turn 65, but because you are eligible for Medicare, it may work differently. In most cases, if your employer has fewer than 20 employees, Medicare will become your primary insurer when you are eligible for Medicare and your group plan becomes a secondary payer. In this case you will need to enroll in both Medicare Part A and Part B to make sure your health care bills are covered. If your company has more than 20 employees, your group plan continues paying first, and Medicare would be your secondary payer. In this case, you should enroll in Part A of Medicare because it is usually premium free. And you can delay enrolling in Part B and save paying the premium which is subject to your earnings.
However, if you have a high deductible plan at work and/or are paying a high premium for your group plan, you should look at what Medicare and a supplement would cost as compared to your current group health plan costs. Often, Medicare can be a better deal both in premium costs and benefits.
If you decide to delay Part B and stay with your employer plan, you will not be subject to the Part B late enrollment penalty if you enroll in Part B within eight months after your group coverage ends. It would behoove you, however, to enroll in Part B before you retire or lose coverage so you can avoid any gaps in your health coverage.
But wait, there’s more.
It is still not that clear cut, because if your company health plan offers prescription drug coverage, you need to find out if it is considered “creditable coverage” by Medicare. These days more and more companies are offering Health Savings Account-qualified health plans, and most of those plans may not have drug coverage that Medicare considers creditable coverage. Because of that, you could be subject to a late enrollment penalty for not enrolling in a Medicare Part D drug plan. If your group employer drug coverage is considered creditable, then you can delay enrolling in a Part D plan until after you retire or lose coverage. In order to avoid paying the Part D penalty at that time, you will need to enroll in a Part D plan within 63 days of losing your group coverage.