Medicare and Employer Coverage Explained

Are you turning 65 and deciding between staying on an employer health insurance plan or going onto Medicare? In this article I go over some important things such as how to avoid penalties to keep in mind when considering whether to leave employer coverage to start Medicare when turning 65.

First you will want to compare the actual coverage and price of your employer plan to Medicare including either a supplement plan or Medicare Advantage plan. It is also very important to look at what your medications will cost on Medicare vs your employer plan.

Now here are some important things to keep in mind if you are trying to decide between delaying Medicare and staying on Employer…

Things to know when considering delaying Medicare to stay on employer coverage

1. You can only delay Medicare without a penalty if you have group coverage through ACTIVE employment either through yourself or a spouse. Again the key word here is “Active” employment.
   
2. There must be more than 20 employees at the company in order to delay Medicare without a penalty. This is because Medicare might not deem your coverage “credible” if there are less than 20 employees.

If Delaying Medicare:

Now if you plan on delaying Medicare and staying on your employer coverage you need to keep the following in mind:

1. If you are contributing to an HSA account you cannot have Medicare Parts A or B so you will need to delay both. If you are not contributing to an HSA then you can take Medicare Part A as it will be premium free if you have worked for 10 years and have “40 working credits with Social security.” You can login to your ssa.gov account to check how many “working credits” you have.
   
2. IF you are collecting SS benefits when you turn 65 you will be automatically enrolled into Medicare Parts A and B, and you will receive a welcome packet in the mail with your Medicare card. 

If you plan on delaying Medicare you will need to  follow the instructions in your welcome packet, and send your Medicare card back.

3. If you are not collecting SS benefits when you turn 65 and you plan on delaying Medicare to stay on employer coverage then you Don’t need to do anything. 

A lot of folks ask us “do I need to let Medicare know?” The answer is NO, as long as your employer coverage is creditable, meaning there are more than 20 employees and you have coverage through active employment you can delay Medicare without a penalty. 

4. When you decide to retire and start Medicare there will be two forms to fill out form CMS-40B and CMS-L564, you will send those to SS. 

That will start your Medicare Part B and Part A if you delayed that too. Starting Medicare Part B triggers open enrollment for a Medicare Supplement plan.

So what else do you need to know?

If actively working and there are more than 20 employees and you are covered through that employer than the employer coverage will pay first and Medicare will pay 2nd.

If there are less than 20 employees then Medicare will pay first, that’s why you need to get Medicare A and B if there are less than 20 employees.

Another thing to keep in mind is that if you are delaying Medicare you will have 8 months to get Medicare Part B when you retire without a penalty, in addition you will have 63 days to get a Medicare Part D drug plan or a Medicare Advantage Prescription Drug plan without a penalty.

Also, you will be able to purchase either a Medicare Supplement plan without health underwriting or a Medicare Advantage plan, depending on what plan you are interested in.

Get in touch with a Medicare expert today

You can compare plans at Bluewave Insurance and find a plan in your area that is cost-effective and covers the services you need. As well as helping you once your policy is effective, we’ll also assist you if you encounter questionable charges. We look forward to speaking with you!