Medicare Options for Those Working Past 65

Pedestrians walk past the Social Security Administration office in Los Angeles, Calif., on Oct. 1, 2013. Frederic J. Brown/AFP/Getty Images

Many baby boomers are not slowing down. In 2021, 25.8 percent of adults 65 and older worked. That compares to 30.5 percent of teenagers holding a job. Many seniors postpone Social Security when working, but what about Medicare?

The regulations say you must sign up for Medicare when you turn 65. But is this always true? You may not need to sign up if you’re working full-time with private insurance. But this depends on a few factors.

Signing Up for Medicare

If you’re not on Social Security, you have seven months to sign up for Medicare when you reach 65. This encompasses three months before your sixty-fifth birthday, the month of your birthday, and the three months after you turn 65. This is your initial enrollment period (IEP).

Failure to sign up during the IEP will result in a penalty. This is a premium increase. The increase in premium stays with you for your lifetime.

If you collect Social Security, you will receive a Medicare card 100 days before you turn 65. It will have Medicare Part A and Part B. It is up to you to acquire a supplemental policy and prescription insurance.

But with many seniors still working and on private insurance, how is Medicare handled when turning 65?

Companies Under 20 Employees and Medicare

If you have private insurance through your employer, the company’s size matters. If there are 19 or fewer employees in the company, it’s considered a small group.

You may like your private insurance plan, but you cannot choose to elect it as your primary insurance.

When turning 65, if you aren’t on Social Security and even if you have insurance through your company, you must sign up for Medicare. Medicare will be the first payor, and the company insurance will be the second payer if you are sick or injured.

You become the first payor if you don’t sign up for Medicare. This only applies to employees turning 65 whose company only has 19 employees or less. There will be a gap in your insurance coverage if you don’t sign up for Medicare.

You also must sign up during the initial enrollment period or be penalized. You don’t want to wait. It takes a month for Medicare to kick in. If you wait until your sixty-fifth birthday, you risk having a gap in coverage. Sign up for Medicare within three months before turning 65 so coverage starts on your birthday and eliminates a coverage gap.

20 Employees or More Has Choices

If your company has 20 employees or more, you’re not obligated to take Medicare when you turn 65. You can keep your company’s private insurance if you wish. Or you can go on Medicare as the primary and purchase supplemental and prescription insurance policies. You could also keep private insurance as your secondary to Medicare.

You also have the option of staying on your company’s insurance and electing to sign up for Medicare Part A (hospitalization) while not signing up for Medicare Part B. There is no premium charge for Medicare Part A.

The drawback to signing up for Medicare Part A is that you’ll lose access to a health savings account (HSA). You cannot put money into an HSA when you have Medicare Part A with a company insurance plan.

Before deciding whether to elect Medicare, you should run the numbers. Consider your monthly premium, deductible amount, co-insurance, and maximum-out-of-pocket (MOOP).

Medicare Plan B is currently $164.90 monthly. And although you’ll still need supplemental insurance and a prescription plan, it may be less than your company’s monthly premium when you add up all the other expenses.

Automatic Enrollment When Working and Collecting Social Security

If you are collecting Social Security while working at a company with 20 or more employees, you can reject Plan B. When you automatically receive the card at 65, simply turn it over and where it says you decline Medicare Plan B, sign it and send the card back to Social Security, or you can take it to a Social Security office.

Make sure you discuss your options with your plan administrator.

Spouse Covered by Private Plan

If you have a younger spouse and are working for a company with 20 or more employees, you may want to keep your company’s insurance.

But if you are working for a company with 19 or fewer employees, you won’t have a choice. You must elect Medicare plans A and B. Your spouse and dependents will need to find another alternative for insurance.

Special Enrollment Period After Retiring

What happens when you finally retire after 65? For example, if you were to retire at 67, it would be considered a life-changing event and you would have a special enrollment period (SEP).

You must prove that you’ve had continuous health insurance the entire time between 65 and when you apply for Medicare. COBRA (Consolidated Omnibus Budget Reconciliation Act) isn’t credible. There cannot be a gap in the company’s coverage. So, if you are changing jobs after 65, make sure you don’t have a gap in insurance.

Your HR department or plan administrator will need to fill out Form L564. This is proof that you’ve had continuous coverage. You'll also need to fill out Form 40B to tell Medicare when you want coverage to begin.

Start the paperwork 60–90 days before you’ll need Medicare to avoid a gap in coverage.

Affordable Care Act and Medicare

Suppose you have insurance through the Affordable Care Act (ACA); you'll need to go on Medicare at 65. If your insurance policy is subsidized and you don’t go on Medicare at 65, you will be penalized.

You'll incur the Medicare penalty if you sign up after the IEP, and you must repay the subsidy amount you received through the ACA after turning 65.

Medicare and Working Past 65

When turning 65, make sure you meet all the Medicare deadlines. If you’re still working, it’s imperative that you sign up for Medicare if you are with a company with 19 or fewer employees. You have more choices if you work for a larger company.

The best course of action is to ask your plan administrator. If you still have questions, contact the Social Security office.

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