When do you think you’ll retire?
Not too long ago, the most common answer was, “age 65”. That’s because 65 was once the standard age for reaching “full retirement age” according to Social Security, meaning you would access your full benefits at that point. Plus, it was – and still is – the age of Medicare eligibility.
So, a worker could reasonably assume that once he or she reached age 65, they could retire, claim their Social Security benefits, and receive healthcare through Medicare.
These days, Social Security’s full retirement age has risen to 66 for those born in 1943 or later, and to 67 for anyone born in 1960 onward. So, many people are delaying retirement at least another year or two (and sometimes longer if their retirement savings falls short of what they need). This means a lot of you are still working at age 65, when you become eligible for Medicare.
Now, here’s a funny thing: You’re actually required to enroll in Medicare when you turn 65. If you don’t, you will face higher premiums when you eventually do retire. For some people, the wait might make sense, but this definitely creates a bit of a puzzle for you.
If you already have health insurance through your employer, it’s important to understand how Medicare will coordinate with that plan. You need to talk with your employer’s health plan administrator, to find out whether you’re required to enroll in Medicare, if your insurance will change once you enroll, and how much you’re paying for health insurance currently. Remember, since you don’t pay taxes on payroll deductions for health insurance, you need to consider the tax implications of keeping your insurance versus enrolling in Medicare.
Should you enroll in Medicare? For most people, Medicare Part A is premium-free. Your hospital expenses will be covered by your employer health care plan, and Medicare Part A would kick in as a secondary payer. In many cases this is a good idea since you might, for example, have a large deductible.
On the other hand, if your employer provides healthcare through a Health Savings Account, their contributions might stop if you enroll in Medicare. You need to investigate this issue before making a decision.
As for Medicare Part B, or doctor and inpatient coverage, the answer is not so clear. If you already have employer coverage, you might not want to enroll in Part B in order to avoid the premiums you will be charged. Part B provides only a very limited value to most people with employer-provided insurance. But if you’re self employed, or work for a small employer with less than 20 full-time employees, Medicare is likely to be the primary payer. So it might make sense to enroll.
The bottom line: It’s complicated. If you’re still working at age 65, and you’re covered by an employer’s group health insurance plan, you should seek specialized guidance when deciding whether to enroll in Medicare.