If you are approaching age 65, you are likely aware that your window for Medicare enrollment is opening.
“I’ve heard it described as a deluge of information,” said Tricia Mahoney, a client manager at the Horton Group. “From what I understand from Medicare-aged people, they start receiving mailings the same week they turn 64. The feeling I get from people I talk to is they may be overwhelmed by the idea of Medicare.”
For some Americans — specifically, those insured on a plan offered by an employer with 20 or more employees — there is an option to delay Medicare and remain on employer insurance. Is that option the right one for you? Mahoney offered a look at the pros and cons of group insurance versus Medicare.
Pro: You don’t have to retire
You don’t have to retire to get Medicare. Mahoney said that’s a common misconception. However, moving from employer coverage to Medicare does offer much flexibility.
“A lot of people are not sure how much longer they are going to continue to work,” Mahoney said. “I talk to people who have the option [to stay on employer coverage or switch to Medicare] that move to Medicare. They think that if they decide to leave or cut back to part-time hours, they are set for medical insurance. Moving to Medicare gives people more flexibility to reduce their hours or possibly retire.”
Con: You are switching to the unknown
Many people have been on employer-sponsored insurance for years. The idea of switching to the unknown can be daunting.
“For people who can delay Medicare without penalty, they tend to stay on their group plan,” Mahoney said. “It’s what they know. It’s what they are comfortable with.”
When evaluating employer insurance, the options are fairly limited and picking them is easier than Medicare, which has numerous options from Original Medicare to Medicare Advantage plans to supplemental plans.
“With employer plans, it’s like ordering a combo meal at McDonald’s,” Mahoney said. “It’s easy. Do you want the PPO? Do you want the HMO? Do you want the HSA? When you go to Medicare, there are so many options. It can be overwhelming.”
Pro: You can switch and keep your ancillary benefits
Medicare does not include dental and vision insurance. If you remain employed but leave your group health plan for Medicare, speaking generally, you can likely keep vision and dental coverage.
“That’s something you need to check with your HR representative on,” said Mahoney. “Most of the time, if you are considering switching to Medicare but want to keep your vision and dental, you can keep it through your group plan. But you absolutely need to check. You don’t want to go on to Medicare and find out that you cannot get that coverage back.”
Con: Medicare doesn’t cover dependents
If you have a younger spouse or children under age 26 who are on your group plan, they will have to find alternate coverage. If your group plan is COBRA eligible and your spouse is nearing Medicare age, the younger spouse can enroll in COBRA for the short term while they await Medicare eligibility. Mahoney has seen instances where this has happened.
Pro: Potential cost increases or savings
Your Medicare coverage, including a supplemental plan, might end up being markedly less expensive on a monthly basis than your contribution to employer-sponsored coverage.
“If someone is moving to Medicare and they are on a supplement or Medicare Advantage plan has a premium that is lower than their employer out-of-pocket cost, that is a real reason to consider a switch,” Mahoney said. “It is important to note that with out-of-pocket maximums on Medicare, those only apply to medical coverage. There is not out of pocket maximum on a prescription plan under Medicare.”
Other important considerations
If you are not already receiving Social Security benefits when you reach age 65, you will not be automatically enrolled in Medicare Part A or Medicare Part B. There is no need to notify Social Security if you decide to delay Medicare. You must actively apply through Social Security if you do want Medicare Part A and/or Medicare Part B coverage.
Those who delay Medicare enrollment at age 65 will need one additional form when they do apply for Medicare Part B. The Request for Employment Information form should be submitted along with your Part B application. This form can be found at ssa.gov. The employer that provided the medical coverage as of age 65 must complete a portion of the form. The individual applying for coverage (employee/dependent spouse) will complete the remaining portion of the form. This form is required for spouses even if the spouse did not work outside the home. The spouse’s form is completed by the employer that provided his/her group medical coverage.
If you have an HSA savings account, you may continue contributing to your account up until the month prior to your Medicare enrollment. Once you are enrolled in Medicare, all contributions must stop (including contributions made by an employer).
Learn more about switching from employer coverage to Medicare here.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.