How Medicare Works with Employer Health Plans After 65

Many individuals continue working past the age of 65, often maintaining employer-sponsored health insurance. If this applies to you, understanding how Medicare works alongside your employer’s health plan is crucial to ensure seamless coverage and avoid penalties.

1. Do You Need Medicare if You Have Employer Coverage?

Whether you need to enroll in Medicare at 65 depends on the size of your employer and the specifics of your health plan:

For Employers with 20 or More Employees:

• Your employer’s health plan is the primary payer, meaning it covers most of your healthcare costs first.

• Medicare becomes the secondary payer, covering costs your employer plan doesn’t pay (e.g., deductibles or copayments).

• You may choose to delay enrolling in Medicare Part B (medical insurance) to avoid paying unnecessary premiums if your employer coverage is sufficient.

  
  

For Employers with Fewer Than 20 Employees:

• Medicare becomes the primary payer, and your employer’s plan is secondary.

• In this case, you’ll need to enroll in Medicare Part A and Part B to avoid gaps in coverage.

  
  

Pro Tip: Check with your employer’s benefits administrator to determine how your health plan coordinates with Medicare.

2. Medicare Part A: Free for Most People

• Cost: Most people qualify for premium-free Part A, which covers hospital stays, skilled nursing care, and hospice services.

• Enrollment: Even if you’re working, it often makes sense to enroll in Part A at 65 since it’s free and can act as secondary coverage for hospital expenses.

• Exception: If you have a Health Savings Account (HSA), enrolling in Part A may stop your ability to contribute to the account. Discuss this with a financial advisor.

  
  

3. Medicare Part B: Should You Enroll?

• Cost: Part B has a monthly premium ($164.90 in 2025, adjusted based on income).

• Decision Factors:

  • If your employer coverage is comprehensive, you might delay Part B enrollment.

  • If Medicare is the primary payer (small employer), you must enroll to avoid gaps.

    
    

Avoiding Late Enrollment Penalties: If you delay Part B, make sure your employer plan is considered "creditable coverage." Once you leave your job or lose coverage, you’ll have an eight-month Special Enrollment Period (SEP) to sign up without penalties.

4. Prescription Drug Coverage (Medicare Part D)

• Creditable Coverage: Ensure your employer’s drug plan is as good as or better than Medicare Part D. If it’s not, you may face a late enrollment penalty when you sign up for Part D later.

• Coordination of Benefits: If you keep your employer coverage, Medicare Part D can act as supplemental drug coverage.

  
  

5. Retiree Coverage and COBRA

• Retiree Coverage: If your employer offers retiree health benefits, Medicare typically becomes the primary payer.

• COBRA: COBRA coverage is not considered creditable for Medicare purposes. If you’re over 65 and relying on COBRA, you must enroll in Medicare to avoid penalties and gaps in coverage.

  
  

6. Key Steps to Take

1. Talk to Your HR Department: Understand how your employer plan works with Medicare.

2. Review Your Coverage Needs: Assess whether your current plan meets your healthcare needs.

3. Avoid Penalties: Ensure you enroll in Medicare on time if required to do so.

4. Consult an Expert: Speak with a Medicare advisor to navigate complex situations, such as combining employer coverage with Medicare.

   
   

Conclusion

Balancing Medicare with employer-sponsored health insurance requires careful planning. Understanding the rules and coordinating your benefits can save you money, prevent gaps in coverage, and ensure you get the care you need.

At Lindbergh and Associates, we specialize in helping individuals navigate their Medicare options, even when employer coverage is part of the equation. Contact us today for personalized assistance!