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Working Past 65? Here's What to Know About Medicare (online only)
March 2012
By Bob Moos


It used to be that people usually retired when they turned 65. But that’s not as true anymore. Many baby boomers are working past what once was the traditional retirement age.

One reason is that Social Security now requires you to be at least 66 to collect your full retirement benefits. Retiring sooner means receiving a reduced Social Security payment.

A number of boomers are also postponing their retirement because the recession shrunk their nest eggs or because they simply prefer to spend their golden years on the job.

Whatever the reason for continuing to work, you still need to consider Medicare as you approach your 65th birthday and qualify for the health care coverage.

First, you should contact your company’s human resources department to determine how your employer-provided insurance will fit with Medicare’s coverage.

Most people will want to sign up for Medicare’s Part A – the hospital insurance – when they turn 65, even if they have insurance through their job. That’s because there’s generally no premium.

Of course, as with any rule of thumb, there’s always an exception.

If you have a high-deductible plan with a health savings account, you should defer enrolling in Part A, since tax rules forbid you to add to your savings account if you’re in Medicare.

When you should sign up for Medicare’s Part B – which covers doctor appointments and other outpatient services -- mostly depends on how large your employer is.

If your company has fewer than 20 employees, Medicare will be your primary insurer when you turn 65, and your employer’s health plan will become your secondary insurer.

Medicare will pay first for your health care bills, and your employer’s group health plan will pay second. Which means you’ll need to enroll in Part B to make sure your bills are covered.

If your company has 20 or more employees, your employer will pay first and Medicare will pay second. So you can delay enrolling in Part B until you stop working.

Once you do finally retire, you’ll have eight months to sign up for Part B without a late enrollment penalty.

As you prepare to retire, check with your company’s human resources department to find out whether you’ll have retiree health care coverage (some businesses still offer it) and exactly how your plan will work.

Medicare will always pay first, but your retiree plan may pay for some of your out-of-pocket costs and for services Medicare doesn’t cover, like vision or dental care.

Whether you keep your retiree plan is up to you.  Remember that your company isn’t required to offer you the same coverage you had as an employee, so your benefits and premiums may change.

After comparing premiums and other out-of-pocket costs, you may prefer to buy supplemental health insurance, often known as “Medigap” insurance, to help pay for what Medicare doesn’t.

If you opt for Medigap, you’ll have six months from when you enroll in Part B to purchase a policy regardless of any health problem you may have and without paying a higher premium for it.

Don’t drop your retiree plan, however, without first finding out from your company how your decision would affect any dependents on your plan. Once you cancel your coverage, you may not get it back.

Also, if your job-related or retiree health plan includes prescription drug coverage, ask your human resources department if it’s “creditable coverage.” That means it’s at least as good as Medicare’s Part D drug coverage.

If your employer or retiree drug insurance is considered creditable, you won’t have to pay a late enrollment penalty if you later join a Medicare Part D plan.

To learn more about how your employer or retiree health plans work with Medicare, visit www.medicare.gov/publications and view the booklet “Medicare and Other Health Benefits: Your Guide to Who Pays First.” Or call 1-800-633-4227 to find out if a copy can be mailed to you.

Understanding how your insurance choices fit together will help you get the best care for your dollars.

By Bob Moos is the Southwest public affairs officer for the Centers for Medicare & Medicaid Services


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