According to the Bureau of Labor Statistics, more than 10.6 million people aged 65 and above were in the labor force in 2020. That number is growing day by day. If you're working at the age of 65, which is the age of Medicare eligibility, you may wonder, "do I need to sign up for Medicare." Whether you need to sign up for Medicare depends on the size of your employer.
Working for a company with fewer than 20 employees
If you have health insurance from a company that employs fewer than 20 employees, you must sign up for Medicare as soon as you meet the eligibility requirements.
That's because, for smaller companies, Medicare coverage is the primary while your employer coverage is secondary. That means Medicare will pay first while your employer plan will pay second. If you don't enroll in Medicare, you may have to pay the cost of healthcare out of your own pocket. The employer plan will realize you are eligible for Medicare and can refuse to pay your claims. Also, delaying enrollment into Medicare when you're eligible comes with late enrollment penalties.
Working for a company with 20 or more employees
If you have health insurance from a company with 20 or more employees, you don't need to sign up for Medicare. You can delay enrollment into Medicare until you retire, drop your employer plan for Medicare, or have both plans. You have the luxury of choice because, for larger companies, the employer plan is the primary coverage while Medicare is second. That means your employer will pay for covered services first as the primary payer. If you choose to keep your employer coverage, you can sign up for Medicare when you retire without a penalty during a special enrollment window that runs for 8 months.
What if I have COBRA coverage or retiree health insurance from a former employer?
If you have COBRA coverage or receive retiree health insurance after you leave the company, you must enroll in Medicare during the special enrollment period that begins the month after your employer coverage ends. If you wait until after COBRA or your retiree plan ends, you could be without health coverage for several months. Medicare is the primary coverage, while COBRA and retiree health plans are secondary. If you don't enroll in Medicare, your COBRA or retiree plan may refuse to pay as soon as they realize you're eligible for Medicare.
Also, COBRA and retiree plans are not considered employment plans, so you won't be eligible for a special enrollment period after they end. That means you may be unable to avoid late enrollment fees and, in some instances, permanently higher premiums.
How can I sign up for Medicare while working?
You can sign up during the initial enrollment period - a seven-month window that includes the three months before your birthday month, your birthday month, and three months after your birthday month. If you've been paying Medicare taxes for at least ten years, you'll be eligible for premium-free Part A. Since you won't pay a premium, it doesn't hurt to enroll in Part A while you delay enrollment in Part B. After leaving your job, you can sign up for Part B during the special enrollment period. Remember that this only applies if you work for a large company. If you work for a small company, you must sign up for Part A and B as soon as you turn 65.
Do I need to apply for Part D?
If your employer's drug coverage plan is as good as Medicare Part B, it is considered creditable. In that case, you can delay Medicare enrollment. If your employer coverage isn't creditable, you'll need to apply for Medicare as soon as you become eligible. Otherwise, you could face late enrollment penalties. Your insurer will send you a letter annually if your coverage is creditable.
Talk to your employer's benefits administrator before you make a decision. You can also contact us If you have further questions about Medicare while working. We'll do a cost/benefit analysis of your options and help you make the right decision.