Working After 65: A Guide for Employed Seniors
At 65, planning for health coverage becomes crucial, especially if you expect to continue working.
Many people are choosing to delay Medicare enrollment and stick with employer health insurance. While working past 65 can boost retirement savings, it’s important to enroll in Medicare Part B on time to avoid penalties.
Generally, you should enroll at 65 unless you have current coverage through your or your spouse's employer, which may allow you to delay without extra costs.
Find Your Scenario
Finding your scenario is the first step in identifying what coverage is right for you.
Below are several situations that those working past 65 may fit into:
Large Employer | 20+ Employees |
Medicare Part B Decisions: Delaying Part B is often a smart move. You avoid unnecessary premiums while you're covered by employer insurance.
Enrolling in Part A: Generally, there's no cost for Part A, to get added hospital coverage.
Coordination of Coverage: Your employer plan usually pays first and Medicare pays second.
Small Business | Under 20 Employees |
Importance of Enrollment: In smaller companies, Medicare becomes primary coverage. Delaying enrollment could leave you with no primary insurance and high out-of-pocket costs.
Communicating with Employers: Small business often require you to take Medicare at 65. Make sure to ask your employer about how their plan coordinates with Medicare.
Self-Employed |
Avoiding Penalties: If you're self-employed, enrolling in Medicare at 65 is crucial, especially to avoid Part D penalties.
Balancing Coverage: We can assist help you understand how Medicare can work best with your current health plan.
COBRA to Medicare |
Timely Enrollment: If you're on COBRA when you turn 65, enroll Medicare right away to avoid coverage gaps and penalties.
Understanding COBRA and Medicare: COBRA often ends when you enroll in Medicare. Having both can result in coverage overlaps.
Stipend-Based Health Insurance |
Understand Medicare Enrollment: Talk to your insurance provider about how a stipend-based insurance plan interacts with Medicare.
Strategic Planning: We can help you understand the ins and outs of enrolling in Medicare on your stipend benefits.
No Employer Health Insurance |
Immediate Action Required: Enroll in both Medicare Part A and B to ensure comprehensive coverage and avoid late enrollment penalties.
Exploring Financial Assistance: If cost is a concern, we can guide you through options for assistance.
Health Savings Accounts (HSAs) and Medicare
If you're contributing to an HSA and planning to enroll in Medicare, it's important to understand the tax implications of making contributions to your HSA.
You can still use your accumulated HSA funds for qualified medical expenses, including Medicare premiums (except Medigap).
Once you enroll in Medicare, you can no longer contribute to an HSA. Contributions should be stopped at least 6 months before enrolling in Medicare. This is because the IRS considers you covered by Medicare for the 6 months prior to your enrollment date, retroactively.
Penalties for Late Enrollment
There can be penalties if you are late to enroll in Medicare, including:
If you miss signing up for Medicare Part B during your Initial Enrollment Period and don’t qualify for a Special Enrollment Period, you may face a 10% penalty on the Part B premium for each full 12-month period you could have enrolled but didn't.
This penalty is permanent and added to your monthly premium.
If you don’t sign up for Medicare Part D Prescription Drug coverage when first eligible and lack other creditable drug coverage, you’ll face a penalty. This is 1% of the national base premium for each uncovered month and is added to your monthly Part D premium.
Next steps...
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