Balancing Medicare and employer healthcare

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Q. I qualify for Medicare next year and I plan to continue working so my wife who is younger than me can have health insurance. But how does it work for me if I have an employer plan and I qualify for Medicare?
— Almost old enough

A. Individual health plans can be very costly, so we understand why you’re willing to work a little longer.

Your first step should be to speak with your benefits administrator to make sure you will be able to maintain the group’s plan after turning 65, said Geraldine Callahan of Callahan Financial Services in East Hanover.

“Some employer groups require you sign up for Medicare Parts A and B and still allow you to maintain group coverage,” Callahan said. “Others will allow you to stay on their plan and maintain status quo.”

Callahan said there are also employers that will require you to get off the group plan completely. If this is the case, she said, you will need to sign up for Medicare Parts A and B and add a Medicare Supplement and Part D prescription plan to cover the gaps.

Generally under Medicare rules, if you are covered by an employer group with 20 or more employees, you do not have to sign up for Medicare Part B, she said. You will have a Special Enrollment Period (SEP).

“Medicare beneficiaries who qualify for a Special Enrollment Period can enroll in Medicare Part B without incurring a late-enrollment penalty while they are still employed or their spouse is still employed and up to eight months after they no longer have employer coverage,” Callahan said. “For Part D prescription drug coverage and Medicare Advantage, you will be given a grace period of only 63 days after group coverage ends to sign up.”

Callahan said you may want to sign up for Part A when you first become eligible for Medicare even if you continue working because, she said, it may offer better coverage for hospitalization than your employer group plan.

Part A is usually free to you, but check with your benefits administrator, she said.

“If your employer group plan is a high-deductible health plan paired with a health savings account, and if you want to keep contributing to the health savings account (HSA), you should not sign up for Part A,” she said. “The reason is that once you enroll in Medicare, your HSA contributions must stop.”

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This post was first published in January 2018. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.