Reviewing health care insurance options is as important as getting a physical or flossing (and about as much fun). For employees age 65 and older, this decision becomes more complicated due to Medicare eligibility. Major questions arise for this group of employees:
- What, if any, health insurance coverage will my employer provide when I turn 65?
- Should I apply for Medicare at age 65?
- If I apply for Medicare, what parts should I apply for (A, B, D)?
Legally, employers can drop employees from their group health plans once they turn 65. But Medicare secondary payer rules prevent employers from reducing health benefits to current employees due to their eligibility for Medicare (except for very small employers). So, the employer must offer equal health benefits to all employees; coordinating health benefits with Medicare is allowed as part of this offering.
Employers with more than 20 employees typically offer group health coverage to 65+ employees, with Medicare acting as the secondary payer. In this case, eligible employees should enroll in Medicare Part A, hospital coverage, which is free. These employees should also get a deferral from Medicare so that they are not subject to penalties for enrolling in Parts B and D in the future.
Employers with less than 20 employees offer group coverage that is the secondary to Medicare. In this case, eligible employees should enroll in Medicare Parts A and B (Part B covers medical services, including doctor visits). Failing to enroll in both parts of Medicare could leave them responsible for paying out-of-pocket for anything that Medicare would have covered.
Here are some tips and considerations for employees age 65+ in making health insurance and Medicare enrollment decisions:
✔ Coordinate with your spouse. If you are both still working at age 65, you can compare employer health plans and how they work with Medicare. If spousal/family coverage is available, choose the optimal plan.
✔ Get in writing the details of your employer-provided coverage to help you decide how to handle Medicare choices.
✔ Plan to enroll in Medicare Part A (it’s free!) up to 3 months prior to your 65th birthday. You can sign up online or at your local Social Security office.
✔ If you are planning to enroll in Medicare Part B or Part D (prescription drug coverage), you can enroll up to 3 months prior to age 65 or within 8 months of retirement or loss of group health coverage (if you miss the 8 month Special Enrollment Period, you will need to wait until the next General Enrollment Period for that coverage).
✔ Consult with a CERTIFIED FINANCIAL PLANNER™ to help you choose the benefits that are most appropriate for your financial situation.
✔ Most importantly, do your research and plan ahead; Medicare has strict enrollment periods and rules that come with financially penalties.
This is the third blog in our 8-part open enrollment series. Check back in the upcoming days for more important tips to help you make the best choices for the upcoming year.
Sandra D. Adams, CFP® is a Lead Financial Planner at the Center for Financial Planning, Inc. In 2012, she was named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered blogs, she is a regularly quoted in national media publications such as the Wall Street Journal, Research Magazine and the Journal of Financial Planning. Sandy is a frequent speaker on the topic of Elder Care Financial Planning.
Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning and not necessarily those of RJFS or Raymond James.
