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  • Deciding to keep employer health benefits, or enroll in Medicare. 
  • Coordinating Health Savings Accounts (HSA) and Medicare.
  • How to avoid Medicare lifetime penalties.

Employer Group Health Insurance & Medicare

If you're deciding to work past age 65, you'll have some decisions to make regarding your options for enrolling in Medicare. It's very important to understand what these options are and how to effectively navigate them in your best interest. Let's take a look at some of the criteria in making this decision of either staying on your employer group health insurance or choosing Medicare benefits. 

Medicare Options for Employees.

It's imperative to understand that for those who are eligible for Medicare at age 65, and are choosing to continue working, that you coordinate with your HR department. Employers cannot force you to give up group health insurance benefits at age 65 if you are actively employed and choose to continue working.  However, YOU have the choice to activate full Medicare benefits as your primary insurance if it makes sense to do so. One thing is for sure. If your employer has less than 20 employees you MUST sign up for Medicare as your primary health insurance.

Qualified Employer Group Health Plans.

Saying goodbye to your employer at age 65 or older means you'll have Medicare decisions to make. 

Choosing Employer Coverage or Medicare

So how do you make the choice of keeping employer group health coverage or signing up for Medicare as your primary healthcare. As we stated, as long as your employer is over 20 full and/or part time employees on payroll, it comes down to a cost analysis. How much do you pay in premiums, what are the costs associated with co-pays, co-insurance, prescription drugs and total out-of-pocket exposures on an annual basis.  

When it comes to Medicare it's quite easy to get an idea of what your annual costs and financial exposures will be. In many cases we find that choosing Medicare over the Employer Group Health Plan is much better. However, one issue arises time and time again, and that's the cost of prescription medications. In many cases, this alone will determine your path. Let's say that many employer group plans have very rich benefits when it comes to prescription drug coverage. This would be a deal breaker for anyone who has high cost prescription drugs, and therefor would be better of staying on the employer group plan.  

Medicare Part A and Employer Health Plans

For everyone who has paid Medicare and Social Security taxes, you'll become eligible for Medicare Part A at age 65. If you have accumulated 40 quarters (10 years) of employment then Medicare Part A will be premium free. An employee who chooses to work past age 65, as many people do these days, the employer group health plan is considered primary, and Medicare Part A would become secondary. This is a great benefit if you employer plan has a high deductible or cost sharing for hospitalization. Since Medicare Part A has a annual deductible of ($1632 in 2024) then your out-of pocket will be capped as Medicare will pay all charges after the $1632 per year deductible.

Medicare and Small Group Health Insurance

If you are employed at a company with less than 20 full time and/or part time employees, then you must enroll in Medicare as your primary health insurance at age 65. Failure to do so, can lead to lifetime Medicare penalties that you will pay for the rest of your days. Your employer group plan will become secondary to Medicare and in some cases can help pay after Medicare pays their part. You may not have to enroll in a Medicare Part D prescription drug plan if your employer plan has benefits that are equal to or better than what Medicare offers. 

Coordinating Medicare and Health Savings Accounts (HSA)

Many employers will have the option for you to enroll in a Qualified High Deductible Health Plan and with that comes the ability to contribute to a Health Savings Account, also referred to as an HSA. This feature allows you to contribute to a tax favoured savings account and whether you use these funds or not, they will always be there for you in the future. In some cases your employer may contribute to the HSA, or a portion of your salary is directed to the HSA to help pay for medical expenses. 

If your employer has less than 20 employee's, then you'll have no choice but to enroll in full Medicare benefits at age 65. If your employer is considered a large group employer, more than 20 employees, then you may continue to receive health insurance though your company. Either way, you must stop contributing to the Health Savings Account before any part of Medicare kicks in. If you don't, then there is a high probability that the IRS will penalize you.  

How to Avoid Medicare Part B Penalties