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Many of my clients are turning 65 and still working. So it’s hardly surprising I get asked frequently about how Medicare works for those 65 and over who still have a job. According to a survey by the U.S Bureau of Labour Statistics, by 2024 a staggering 13 million out of a projected 164 million workforce are expected to be 65 or older by 2024. This number is known as a labor force participation rate and is expected to increase fastest for the oldest segments of the population. There are two main options if you are 65 and over and continue working. One is to keep going with your employer’s group coverage. They must have over 20 employees and you must still be working for them, secondly, enroll for part A and B of Medicare, but you must let your employer’s HR director know. Ok so now we’ve got the short answer nailed, let’s jump right in with some of the available options for you to get the most out of your Medicare if you are a working 65-year-old. Option 1- Staying with your employer’s group coverageIn my experience as an independent broker, most people, including those who are 65 and older who are working aren’t getting the most of their Medicare plan. So if your employer’s coverage is working well for you, then one option is to continue with it when you are 65 or older and you want to continue working. Many people ask me how continuing with their group coverage works once they become eligible for social security… If your employer’s coverage is working well for you, then one option is to continue with it when you are 65 or older and you are still working. At the age of 65 most of us become eligible for social security so how does this work with a Medicare plan? What happens when I become eligible for social security?Staying with your employer’s group coverage might be working for you, but after your 65th birthday, you are automatically enrolled on Part A of Medicare. How does Part A affect me as a working 65 years old?Let’s start with breaking down Part A, what are the benefits of Part A and how does it work?
However, if you are hospitalized, or if you do have to go to a skilled nursing facility, then Medicare can be billed. This could offset some of the additional costs that you see on the group coverage side and is likely to be the form of deductibles, copays, and coinsurance “After your 65th birthday, you are automatically enrolled on Part A of Medicare.” How does part B play out if you are 65 or over and still working?Part B and working 65-year-olds
It may make sense for many 65-year-olds who are still working to opt-out of Medicare Plan B Creditable and currentHowever, for full coverage of these costs, it’s crucial your employer’s group coverage is what’s referred to as ‘creditable and current’. In simple terms, this means that you are still working for the company you have employers group coverage with and your employers have 20 or more employees and a legitimate group plan. “For full coverage of these costs,it’s crucial your employer’s group coverage is what’s referred to as ‘creditable and current’.” To be really clear here, for costs concerning your doctor’s visits and any outpatient visits, you must not be on Cobra, and your group coverage can’t be with a company you previously worked for. Otherwise, there may be a penalty to deal with. My top tip here is that you contact your HR representative and check with them directly. TimingIf you have ticked the ‘credible and current’ box, then you can stay on your employer’s group coverage for an unlimited time, providing of course as I said earlier, that you are still actually working for that company. This gives you the freedom to start with Plan B at any time you wish, and you won’t incur penalty charges. 10% penaltyHowever, once you come off your employer’s group coverage, then there is an 8 month period during which time you will need to get started with Plan B of your Medicare Plan. If you go beyond that 8 month grace period, then for every year that goes by, you will be charged a 10% penalty. The top tip here is to make sure you have checked regarding the creditable and current status of your employer’s coverage and set yourself some alerts to remind you of the lapsing 8 month period. Many of my clients are unsure how having a health savings account works with Medicare if they are 65 or over and working. What if I have a health savings account?If you have health savings, it’s crucial to understand a few important things if you are 65 or over and are still working. If you decide to take Part A then any money you add to your health savings account is no longer tax-free. Any existing money you have in your account has already been taxed, so there will be nothing taken for taxes due, but once you decide to opt into Plan B, then you will no longer be able to add funds to a health savings account without it being taxed. When I talk to my clients about this, usually most people are just happy to continue without adding money to their health savings account. Now we’ve looked in-depth about the first option in how Medicare works if you are 65 or over and are working. Let’s talk a little more about the 2nd option available, Medicare. “If you decide to take Part A then any money you add to your health savings account is no longer tax-free.” Option 2 – MedicareIf your employer doesn’t fulfill the creditable criteria and you aren’t still working for them anymore, or for other reasons, you may want to go right ahead with Medicare. This is a great option as long as you:
Option 3 – Employer ContributionsIf your company is willing, you could also work out an employer contribution to your health care. Rather than your employer including you in the group health plan, you could receive additional funds each pay period to cover the cost of your health care outside of the group plan. This can be really useful due to the premium that’s charged on Plan B with Medicare, so it may help you offset those costs and the cost of a Medicare Supplement or Medicare Advantage Plan. Keep in ind though, there are a few things that would not be covered under original Medicare or if you have a Supplement. If any of these are important you may want to consider adding plans that would include these outside of your plan.
Make sure you look at the cost of adding the Dental/Vision/Hearing plans and your Prescription Drug Plan so that if your employer is crediting you for those plans they are contributing enough. Most employers are more than happy to make this contribution mostly because the cost (even when bundling the Part B Premium, supplement cost, D/V/H and a drug plan would be lower than what their contribution would be to the group plan. “Some of my clients tell me they have got their employers’ previous contributions through group coverage credited back to them monthly.” And finally… I hope I’ve covered lots of the main points and options when getting the most out of your Medicare if you are 65 or older and still working. If you are like me and are a visual learner, then be sure to stop by my youtube channelfor a visual representation of the points in the article, or see the video below. From my experience as a broker and from speaking to clients I know that many Medicare customers aren’t getting the most out of their plan, so every week I put out new information on my most-asked Medicare questions. I’d also love to hear from you if you have any Medicare questions on any subject that you might be struggling to figure out …so don’t hesitate to give me a shout. About the AuthorHello! I’m Jo Hutchison and I’m the owner of Founders Life & Health. I’m a proud baseball mom, lover of live music and all things potato.. My husband and I have two great boys and two lazy hound dogs. My boys play a LOT of baseball so when I’m not helping my clients we can almost always be found on a baseball field somewhere in the Midwest.
I’m a member of NAIFA (National Association of Insurance and Financial Advisors) and a member of NAHU (National Association of Health Underwriters). I spend a good deal of my time working on educational outlets and working on healthcare policy change to help bring comprehensive and AFFORDABLE coverage to everyone. Nothing makes me happier than sharing the tidbits of knowledge that I know about the Medicare and health insurance world so people can make the most informed decisions about what plans they need. The most important thing that I have learned through the years in this business is that each client has very different needs. Our goal is to listen to you, assess your needs, and use our experience and knowledge to help you make informed decisions about your health care coverage. We are an independent brokerage so we advocate for our clients, not the insurance companies.
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