At one time, most people retired at age 65, so Medicare became a necessary part of post-retirement health care. Now, however, trends are changing. According to the Pew Research Center, the number of employed Americans over age 65 has steadily increased since May 2000. As of May 2016, nearly 20 percent of older Americans still have jobs, whether part-time or full-time.
Can you get Medicare while still working? And if you rejoin the workforce, what happens to your Medicare plan?
Taking Medicare While Still Working
In most cases, you should take Medicare Part A as soon as you turn 65. It’s a free program that you’ve already paid for through your payroll, so there’s no reason to delay it. If you’re wondering when to apply to Medicare while still working, you don’t have to worry as much about Part A as Parts B, C, and D, because it’s the only part that doesn’t involve a monthly cost.
The only time you should delay Part A is when you have a Health Savings Account, or HSA. If you enroll in Medicare Part A, your employer can no longer contribute to your HSA, which could prove costly for your health care down the line.
You might want to take Medicare Part B even if you’re still working. You’ll have to pay a monthly premium, but it can pick up costs after your employer-sponsored insurance completes a claim. If your job doesn’t offer insurance and you’re covered under the Affordable Care Act, Medicare Part B makes sense.
Dealing With Medicare After You Rejoin The Workforce
There’s a fee involved if you unenroll from Medicare Part B after you enroll during the initial enrollment period (IEP), unless you can get a special enrollment period. In some cases, the penalty includes a 10 percent surcharge for each year-long period you could have signed up for Part B but failed to do so.
Keeping your Medicare Part B insurance could serve you well, however, even if you’re given access to employer-sponsored insurance. For instance, some insurance plans only cover certain procedures, tests, and office visits, and your Medicare coverage might pick up the rest.
Separating Medicare Into Parts
Before you can decide when to apply for Medicare while still working, understanding how different Medicare components work will help narrow down your options.
- Medicare Part A: Covers hospital-related expenses, from hospitalizations to hospice care. It’s a free benefit given to taxpayers over age 65.
- Medicare Part B: Covers preventive care, doctor’s office visits, tests, imaging services, outpatient services, and more. It’s similar to a primary health insurance policy.
- Medicare Part C: Known as a Medicare Advantage plan, this part of Medicare allows you to choose Medicare services through an insurance provider you trust.
- Medicare Part D: Covers prescription medications and related expenses.
- Medigap: An insurance policy that helps cover the gaps between Medicare coverage and out-of-pocket expenses for seniors.
If you’re working or rejoining the workforce, you probably only need Medicare Part A, and you might want Medicare Part B to help with some costs. This applies, too, if your spouse has employer-sponsored health insurance to which you subscribe.
Philip Moeller, a Medicare expert writing for PBS, cautions seniors against picking up and dropping Medicare plans multiple times. You can incur penalties and find yourself uninsured for periods of time. Moeller notes that if you drop Medicare Part A or Part B, you might lose your entitlement to Medigap and other benefits.
Worrying About Medicare’s Status
Rumors have circled for years about Medicare’s ability to take care of seniors as time passes. As we’ve noted in previous posts, these rumors are mostly rooted in myth. In fact, you shouldn’t worry at all about whether you can trust Medicare to cover your basic health care needs, even after you retire.
While you’re still working, you can reduce your costs by taking advantage of employer-sponsored insurance or by signing up for Affordable Care Act plans. Whatever you choose, compare your options for Medicare supplement insurance so you know the best path forward.