I am still working and have insurance coverage. What do I need to do about Medicare when I turn 65?
This question has a lot of moving parts.
Let’s start with a few things that are going to determine what we will end up doing about your Medicare.
Cost of your current coverage through your employer
Are you insuring a spouse or is a spouse insuring you?
What is your prescription drug load?
Size of your current employer
Are you collecting your Social Security benefit?
Now that we know what we have to consider, let’s look at these point by point.
1. COST OF YOUR CURRENT COVERAGE THROUGH YOUR EMPLOYER
Let me say this loud and clear: I would not recommend you enroll in Medicare Part B and stay on your employer’s coverage. Why? When you enroll in Medicare Part B you have a guaranteed enrollment into any Medicare Supplement or Medicare Advantage Plan with no health questions asked. You do not want to start Medicare and let this opportunity slip by if you have health issues. You may not be able to get the coverage you want in the future when you go to leave or lose your employer coverage.
If you are working and have coverage through your employer, the question is: do you start Medicare Part B and leave your employer coverage, or just stay on your employer’s coverage?
This comes down to a cost/benefit analysis. You will want to look at two variables: cost and liabilities. Everyone wants the same thing. We all want the best coverage for the least amount of money.
Medicare Part B, at a minimum, will cost you $170.10 per month. This amount can be more for high income wage earners since both Medicare Part B and Part D are means tested.
If your coverage through work costs you less than $170.10 per month, then it should be easy stay on your current coverage. But wait...what risk or liabilities does my plan through work have? If your deductible and co-insurance on your work plan is higher than $6,000 per year, then you might want to go with Medicare Part B and a Medicare Advantage Plan to lower your risk. Oftentimes, we see employer plans with very high deductibles. Most Medicare Advantage plans in our area have no deductible making care much more accessible.
If you are paying between $135 and say $350 per month for your employer plan, then we really have to dig into the numbers so we can figure out where you are getting the most bang for your buck.
If you pay over $350 per month for your employer plan, it becomes quite easy as to what to do. It’s time to leave your employer plan and enroll in Medicare Part B and select what type of coverage you would want. Remember you have two choices: a Medicare Supplement coupled with a Medicare Part D stand alone prescription drug plan, or a Medicare Advantage Plan. The top of the line Medicare Supplement Plan G and Part D, along with Medicare Part B, should cost you under $350 per month. This would leave your only liabilities to be your prescription drug copays.
2. ARE YOU INSURING A SPOUSE, OR IS A SPOUSE INSURING YOU?
Again, we are going to look at cost and liabilities because we always want the best coverage for the least amount of money.
If you are working and insuring your spouse, the first thing we will want to look at is your spouse’s age. Are they younger or older than you?
If they are older than you and Medicare eligible, you both might end up leaving your coverage through your employer. You may go onto Medicare Part B plan and choose one of your two options for coverage. Your options are a Medicare Supplement coupled with a Medicare Part D stand alone prescription drug plan or a Medicare Advantage Plan. You must consider the cost for the both of you to be insured. We know that Medicare Part B in 2022 costs $170.10 at a minimum per person. So if your employer coverage costs less then $300 per month to insure the both of you, you might want to consider staying on your employer coverage and delay enrollment in Medicare Part B. We will want to look at the amount of liability that your employer coverage has to make sure you are ge#ing not only the best cost but the lowest amount of risk.
If your spouse is younger than yourself, there are a few things we will want to consider. Is your spouse working and can get coverage through their employer? This would remove them from the equation altogether and you would want to focus on your cost. If your spouse is not working and not eligible for Medicare through disability, this is where we would look at cost. Most likely we would tell you to continue with your cover- age through your employer until you were both eligible for Medicare Part B. Having your spouse have to shop for an Affordable Care Act plan and you get a Medicare Plan would most likely cost you more than what your employer coverage would cost. This may depend on your income and if your spouse was eligible for ACA credits toward their premium. Most ACA plans might have more risk or liabilities than your employ- er plan. Doing an in depth cost benefit analysis would flush all this out showing us which way to go.
Is your spouse insuring you through their employment? Again, let’s start with cost. What is your spouse paying to insure you both? Then they will need to find out through their human resource department their cost if they where to drop you. We would take the delta or difference between the two numbers to find out your cost of insurance. Now that we would know the cost, we would look at the employer policy and compare the cost and liabilities to you going onto Medicare Part B along with one of your two options for coverage.
3. YOUR PRESCRIPTION DRUG LOAD
Not only do we need to look at the cost of your plan and what you have at risk or your liabilities, we also need to understand the prescription drugs that you take.
Employer coverage often has great prescription drug benefits due to insuring large groups of peo- ple with di!erent needs.
Often your prescription drug cost goes toward your liabilities or your out of pocket maximum on an employer plan. This is not so on Medicare.
If you take a lot of prescriptions or are on a lot of brand name medications and are always hi#ing your max out-of-pocket to where you pay nothing toward the end of the year for prescriptions or medical visits or procedures, then we are going to want to take a close look at the numbers during our cost/benefit analysis. We might be able to give you a plan at a lower cost with lower medical risk, but you would end up paying more due to the drugs that you take on a daily basis.
If you go onto a Medicare Supplement Plan coupled with a Medicare Part D stand alone drug plan or a Medicare Advantage plan, then your drug costs do not go toward your out of pocket maximum. Both Part D and Medicare Advantage plans have a coverage gap or donut hole in the drug coverage as well.
4. SIZE OF YOUR CURRENT EMPLOYER
If you work for an employer of 20 or fewer em- ployees you will really want to make sure that you make the right decision.
Working for a small employer has a lot of benefits except when it comes to having multiple insurers. What do you mean multiple insurers, you may ask. I am staying on my employer’s coverage so I only have one. That would be wrong. You also have Medicare Part A automatically when you turn 65.
For small groups under 20 members Medicare would be your primary insurer and your coverage through your employer would be your secondary.
This means that you would definitely want to en- roll in Medicare Part B. It is going to cost you a minimum of $170.10 in 2022.
This also means that you now have to choose whether or not to use your guaranteed enrollment privilege when you first start Medicare Part B. If you choose to stay on your group plan and later leave or lose coverage through your employ- er you may have to answer health questions for the coverage you would want.
Most of the time our clients will leave their employer group in this situation to take advantage of their guaranteed enrollment. Also, once you pay for Medicare your employer coverage is o”en close to the cost of what a Medicare Supplement plus a Part D stand alone drug plan would cost. So we can keep your cost the same and give you be#er coverage. The other solution would be to go with a Medicare Advantage plan and cut your cost and keep your coverage close to what it was through your employer.
You may also be penalized for not enrolling when you were first eligible. I have seen clients get penalized for not signing up for Medicare Part B and Part D when they were first eligible. This adds cost every month to your Medicare Part B and Part D premiums for the rest of your life.
5. WORKING WHILE COLLECTING SOCIAL SECURITY
You may be working with insurance coverage and have decided to collect your social security benefit early.
Why does this matter? If you are collecting your Social Security benefit, then Social Security will assume that you want Medicare Part B and conditionally enroll you into Medicare Part B.
You will still want to consider the other four points that we have covered to determine if you are going to keep your Medicare Part B active or decline it to start it at a later date.
When you receive your Medicare card in the Mail about three and half months before your Medicare is scheduled to start (which is the first day of the month you are born). You will need to decide to keep it or send it back.
If you are going to stay on your employer’s coverage and decline Medicare Part B, you will need to fill out the back of your Medicare card and re- turn it to Social Security. They send an envelope for you to send it back in. This will defer your Medicare Part B start date to a later date of your choosing. They will send you back a Medicare card with Part A only on it in due time.