Medicare when you still work

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If you’re 65 or getting close, still working and eligible for your employer’s health insurance, you still shouldn’t ignore Medicare.

Medicare is a complex part of retirement planning, says Adrienne Muralidharan, senior Medicare specialist for Allsup, a company that offers help in choosing the best Medicare plan. “A lot of people are completely bewildered by the whole thing,” she says.

Here’s her advice for people who are 65 but still working and not yet enjoying retirement:

  • If you are eligible for Medicare and working for an employer that offers health insurance and has more than 20 employees, generally, the company can’t legally dump you off its policy. Your employer’s insurance will continue to be your primary coverage. Even if that’s the case, be sure to sign up for Social Security during the seven-month window beginning three months before the month you turn 65. If you don’t sign up and let Medicare know you have what it calls “credible coverage” by filling out the information on the back of the application form and submitting it, there will be a financial penalty when you do eventually need Medicare.
  • If you work for an employer with fewer than 20 employees, the rules are different, and your employer will be able to opt out of providing you with primary coverage. In that case, you must sign up for Medicare as your primary insurance. You’ll also want to ask your employer what happens to any coverage for your dependents — spouse or children. It is very likely that they will be cut off as well, although they’ll have the option of taking COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act, for 18 months.
  • Even if you work for a large employer, you may decide to make Medicare your backup provider and pay for Part B, a Medigap or a Medicare Advantage plan, and a Part D prescription drug plan. That’s because these plans are much more generous than many private health care plans, although new Medicare recipients are often surprised at the full cost of Medicare. Still, if you have a serious or chronic condition, it pays to take a hard look at this option.