Working Past 65: Medicare Enrollment Guide for Seniors

What you should know about working past 65

Your 65^th birthday means it’s time to celebrate – and it can also mean that you are now eligible for Medicare. But if you, like many seniors in the United States, are still working past 65 and planning to retire soon, the rules for getting Medicare aren’t so easy to understand. In this guide, we help you understand when to delay Medicare, when to enroll and how to avoid penalties so you can be confident in your coverage options when working past 65. 

First, let’s understand how Medicare enrollment works. 

Medicare enrollment

If you already receive Social Security benefits, then you are automatically enrolled in Medicare Parts A (Hospital Insurance) and B (Medical Insurance) beginning the first day of the month when you turn 65. Part B is optional, and you may decide to delay it if you have medical coverage through your employer. But if you are not receiving Social Security benefits and are still working, then you will have to sign up for Medicare on your own. During the three months before and after your 65^th birthday, you can enroll in Medicare for the first time – this is called theInitial Enrollment Period (IEP). The Initial Enrollment period is the 7-month timeframe around your 65th birthday – three months before, your birthday month and three months after your birthday month – during which you can sign up for Medicare for the first time.

You can read more about enrollment details for each type of Medicare plan at What Is Medicare? 

How Medicare works if you’re still working after 65

If you are turning 65, still working and have health insurance coverage through your employer,This also applies if you have health insurance through your spouse’s employer. also called a group health or employer plan, you may not need to enroll in Medicare during the IEP. The rules for enrollment depend on the size of your employer: 

1. If your employer has 20 or more employees, then: 

   • You do not have to sign up for Medicare when you turn 65  

   • You can delay signing up for Medicare Part B without having to pay the Part B late enrollment penalty   

   • You can also delay signing up for Medicare Part D prescription drug coverage if your employer plan includes creditableYour prescription drug coverage is expected to pay at least as much as Medicare drug coverage. drug benefits

   • Your group health plan is your primary payer, When you have more than one health insurance plan, the primary payer pays your health costs first based on the coverage limits while the secondary payer pays second. and Medicare becomes your secondary payer

      

2. If your employer has fewer than 20 employees, then: 

   • You may have to enroll in Medicare once you turn 65 

   • You will need to enroll in Medicare Parts A and B to avoid any gaps in your coverage and payment penalties  

   • Medicare is now primary payer and your group health plan is secondary payer 
     
     

3. If you are self-employed, then: 

   • You are required to enroll in Medicare during the IEP once you turn 65 

When should you enroll in Part A?

If you have worked and paid Medicare taxes for at least 10 years, Part A (Hospital Insurance) is usually free. So, signing up for Part A when you turn 65 may make sense – unless you are still working and plan to continue paying into a health savings account or HSA. 

HSAs allow you to use your pre-tax dollars to pay for qualified health care expenses, as well as any deductibles, copayments or coinsurance for health care services. But if you want to keep contributing to your HSA, then you must delay enrolling in Part A. Continuing to pay into your HSA may result in a tax penalty. While you can still use the money left in the account, it is a good idea to stop your HSA contributions at least six months before you enroll in Part A.

Why? Because on the date you enroll in Part A, the Social Security Administration may backdate your coverage by up to six months. For example, if you enroll in Part A on July 1, you could get Social Security benefits dating as far back as January 1 (but not before turning 65). So, any contributions you make to your HSA during those six months (while you were enrolled in Medicare) are called excessive contributions and are subject to a 6% tax. Planning ahead is important to avoid paying penalties and staying covered. 

When should you enroll in Part B?

While Part A is usually free, you must pay a premium for Part B (Medical Insurance). But you may be able to delay signing up for Part B while you are still working. One thing to think about is how your employer plan benefits and costs compare to Part B. If your employer plan has a high deductible or your preferred doctor is not in your employer plan’s network, you may want to consider whether Part B is a better coverage option for you. 

What happens if you delay enrolling in Part B for too long?

Putting off Part B enrollment can result in a 10% lifetime premium increase for every 12 months you should have had Part B coverage but did not. For example, if you delay Part B for three years, you will pay a 30% penalty each month for life. Understanding when you can enroll if you are still working is important to help avoid costly penalties.  

When should you enroll if you retire after 65?

For example, let’s say you decide to retire in June. That means your job-based insurance coverage will also end in June. Once you have retired, you will qualify for a Special Enrollment Period (SEP) and can enroll in Medicare. During this period, you have:  

• Eight months to sign up for Parts A and B, and 

• 63 days to sign up for a Part D planMedicare Part D is the prescription drug benefit part of Medicare. Part D plans help you lower the cost of your prescription drugs, like those you take to manage a chronic condition.

Mark your calendar: Here is a timeline to help you plan ahead and keep track of important Medicare enrollment dates so that you stay covered. 

Medicare enrollment timeline for working seniors

How you can avoid penalties and coverage gaps

Here’s a quick checklist to help you:  

• Track all Medicare enrollment deadlines  

• Confirm that your employer coverage is creditable with your benefits administrator  

• If you have retiree coverage, speak with your benefits administrator to understand what’s included in your plan  

• Stop HSA contributions at least six months before enrolling in Part A 

• If you have COBRA coverage, you should still enroll in Part B once you are eligible (COBRA is not creditable for Part B) 

Want more details about the costs that make up Medicare and potential penalties? We have you covered. Learn more at Medicare Costs, Coinsurance and Penalties.

FAQs: Medicare enrollment for working seniors

Plan ahead to protect your health insurance coverage

Medicare works differently when working past 65 – enrollment timelines can vary and potential late enrollment penalties and possible gaps in your health coverage can happen. That’s why it is important to start planning early. Review your current coverage, keep track of enrollment timelines and understand your Medicare options. With some planning, you can be confident in your choice of coverage now and in the future. 

Are you ready for Medicare? HealthSpring is here to help – contact us to speak to a Licensed Insurance Agent for more information about Medicare plans in your area.