Still Working? Here Is What You Need to Know About Medicare
To enroll or not to enroll? It is one of the most common questions we hear. The answer depends on your specific situation, and getting it wrong can cost you permanently.
The Key Question: Do You Have Creditable Coverage?
When you turn 65, Medicare becomes available to you. But if you are still actively working and covered by an employer-sponsored health plan, you may be able to delay enrollment without facing a late penalty. The critical factor is whether your current coverage qualifies as creditable coverage.
Creditable coverage simply means your employer plan is at least as good as what Medicare provides. Most large employer plans meet this standard. However, there is an important catch: the coverage must come from a current employer where you or your spouse is actively working. Retiree benefits and COBRA do not qualify.
The size of your employer also matters significantly. Whether your employer has more or fewer than 20 employees determines whether Medicare is primary or secondary, and that changes everything about your decision.
Your Situation Determines Your Decision
Employer Has 20+ Employees
Your employer must offer you the same coverage as younger employees. You can delay Medicare Parts A and B without penalty as long as you have active employer coverage. You will receive a Special Enrollment Period (SEP) when you or your spouse stops working or loses that coverage.
Employer Has Fewer Than 20 Employees
Medicare becomes the primary payer and your employer plan becomes secondary. In this situation, your employer coverage may pay very little or nothing at all. Most people in this situation should enroll in Medicare Parts A and B at 65 to avoid significant out-of-pocket costs.
COBRA or Retiree Coverage
COBRA and retiree benefits do NOT count as creditable coverage for the purpose of delaying Medicare enrollment. If you are relying on either of these, you must enroll in Medicare during your Initial Enrollment Period (IEP) or face a late enrollment penalty.
How to Make the Right Decision: 5 Steps
Are You Still Actively Working?
If yes, you may qualify to delay Medicare without penalty. The key word is 'actively.' Retiree benefits and COBRA do not count.
How Many Employees Does Your Employer Have?
Employers with 20 or more employees: Medicare is secondary and you can delay. Fewer than 20 employees: Medicare is primary and you should enroll at 65.
Is Your Coverage Creditable?
Creditable coverage means your employer plan is at least as good as Medicare. Most large employer plans qualify. Ask your HR department for a creditable coverage notice.
When Does Your Coverage End?
When you retire or lose employer coverage, you have 8 months to enroll in Part B without penalty. This is your Special Enrollment Period (SEP). Do not miss it.
What About Part D (Prescription Drugs)?
If your employer plan includes drug coverage, it must also be creditable. If it is not, you should enroll in a Part D plan to avoid the drug coverage late penalty.
Late Enrollment Penalties Are Permanent
If you miss your enrollment window without qualifying creditable coverage, you will pay a penalty added to your premium for the rest of your life. There is no way to remove it.
Your Special Enrollment Period (SEP)
When you or your spouse retires or loses employer coverage, you trigger a Special Enrollment Period. You have 8 months to enroll in Medicare Part B without penalty. This window begins the month after employment ends or coverage ends, whichever comes first.
For Part D drug coverage, the SEP is shorter: you have 63 days from when your creditable drug coverage ends to enroll in a Part D plan without penalty.
Do not wait until the last minute. Contacting a licensed Medicare specialist before you retire gives you time to compare plans, understand your costs, and enroll on the date that works best for you.
Still working and not sure what to do? I help people in your exact situation every week. Call me and we will figure it out together.
813-699-5559Schedule a Free Consultation