Thinking About Retiring? You Need to Think About Health Care, Too

Once you turn 65, you have a big decision. Do you still work or retire? The answer could depend on your health care needs and available options.

Think of it like a garden. You plant, weed, fertilize, and nurture. Now, you must decide — is it time to reap the rewards? You could continue working away. Or you could enjoy the harvest.

Either way, your garden still needs care, so it stays healthy and strong. And that’s where Medicare comes in.

Working or Retiring, Consider Enrolling

If you’re 65, you may want to sign up for Medicare. That’s even if you don’t plan on retiring yet and have health insurance from your employer.

You can enroll as early as three months before you turn 65. If you’re already getting Social Security benefits, you’ll automatically get Medicare.

Planning on Working Beyond 65?

When you have other insurance and Medicare, there are rules for whether Medicare or your other coverage pays first.

If you or your spouse's employer has less than 20 employees:

• Medicare pays health care costs first. Employr insurance pays second.
• Ask your employer if you need to sign up for Original Medicare (Parts A and B) when you turn 65.

If you or your spouse’s employer has more than 20 employees:

• Employer insurance pays health care costs first. Medicare pays second.
• You can wait until you’re no longer working to sign up for Original Medicare. But often people sign up for Part A because most don’t have to pay a monthly premium for it. So, there’s no reason to wait. And remember Medicare can help cover any gaps.
• If your employer’s prescription drug coverage is not “Part D Creditable Coverage,” you may pay a penalty when you enroll in Medicare Part D (prescription drug coverage) later.

You may also consider dropping your employer health insurance and going with a Medicare Advantage (Part C) Plan, especially if it offers better overall benefits.

Working or Retiring, You Might Need Other Coverage

Along with Original Medicare, you have other options to help pay for out-of-pocket expenses. You can:

• Add Medicare Part D (prescription drug plan) with your Original Medicare. It can help control costs if you take specific brand-name drugs or a lot of generic drugs. If you choose Medicare Advantage (MA), that’s easy because many MA plans include Part D.
• Add Medicare Supplement Insurance, often called a Medigap plan, with your Original Medicare. It can help pay some of the remaining health care costs that Original Medicare doesn’t cover, like copayments, coinsurance and deductibles.
• Choose Medicare Part C (Medicare Advantage). It caps out-of-pocket expenses unlike Original Medicare. It also combines medical, hospital, and usually prescription drug coverage under one plan. And it often includes added benefits that Original Medicare doesn’t cover.

Remember, you won’t need Medicare Supplement Insurance if you join a Medicare Advantage plan instead of Original Medicare. And you may not need a standalone Medicare Part D plan either.

Don't Want Penalties?

A few points to remember:

• You’re not eligible to make contributions to a Health Savings Account (HSA) after you have Medicare Part A and/or B coverage. Otherwise, you’ll pay a tax penalty. To avoid paying a penalty, make your last HSA contribution the month before your Part A coverage begins. Premium-free Part A coverage starts 6 months before the month you apply for Medicare, Social Security, or Railroad Retirement Board (RRB) benefits. But no earlier than the month you turn 65. Other rules apply depending on when you apply for Medicare.
• Apply for Medicare when turning 65 to avoid a monthly Part B late enrollment penalty if you are:
  • Self-employed.
  • On health insurance that’s not available to everyone at the company. Ask your insurance provider if your coverage is an employer group health plan coverage as defined by the IRS. If it’s not, sign up for Medicare when you turn 65.
  • On COBRA coverage. Sign up for Medicare when you turn 65 to avoid gaps in coverage and a possible monthly Part B late enrollment penalty. If you’re on COBRA and eligible for Medicare, COBRA may only pay a small portion of your medical bills. Your COBRA will probably end once you sign up for Medicare.

Ready to Dig In?

Once you turn 65, your health is more of a priority than ever. Just like that garden, regular care and attention keeps you flourishing year after year. And that includes making the right Medicare choices!

MR495a 1/2024