20 Jan When I turn 65, what’s the best insurance for my family?

Q. I have health insurance through work and it covers me and my daughter. I turn 65 in July, which means Medicare, I think, and no more coverage for my daughter. She’s a student at Rutgers. I’m thinking of taking student health insurance through United Healthcare for her. I plan on retiring no later than when I reach 66 years and 6 months. What should I do?
— Confused parent

A. The question of whether to keep your current health insurance and Medicare depends on the specifics of your current plan.

You should start by seeing how your current coverage changes when you’re eligible for Medicare.

If your company has less than 20 employees, then you will need to sign up for Medicare when you reach 65, said Jeanne Kane, a certified financial planner with JFL Total Wealth Management in Boonton.

Medicare would be your primary insurance and waiving it will leave a gap in your coverage, she said.

But if your company has more than 20 employees, you don’t have to sign up for Medicare while you are still working, she said.

If your company has more than 20 employees, you will need to sign up for Medicare within eight months of when you stop working or when coverage ends, Kane said.

“This eight-month special enrollment period for Part B starts when you stop working, even if you choose COBRA or other coverage that’s not Medicare,” she said. “You’ll most likely have to pay a higher premium penalty for the rest of your life if you miss this deadline.”

Kane said most people don’t have to pay a premium for Part A — hospital insurance — so you may want to sign up for Part A when you turn 65 even if you are still working.

“You pay a monthly premium for Part B so you may want to wait to sign up until you stop working,” she said. “You won’t pay a late enrollment penalty if you sign up within the eight-month window.”

If you decide to have both your company’s plan and Medicare, it can be expensive and you don’t get double coverage, she said. The plans will work to coordinate your coverage.

There are differences in how the coverage is coordinated based on the company size.

If your company has less than 20 employees, Medicare would be your primary insurance, and your company health insurance would pay secondary, Kane said.

“Check with your human resources department to find out if you need to sign up for Part A and B,” she said. “Some company’s health insurance might not cover your costs if you are eligible for Medicare.”

If your company has more than 20 employees, then your company’s health insurance would be primary, and Medicare would be secondary, she said.

“Whether people keep their employer insurance and add Medicare Parts A and B will depend on eligibility, cost and coverage.

You’ll want to answer some questions so you know what makes the most sense to have for you, again starting with whether your company requires you to take Medicare.

Then, look at the premium costs for your company health insurance as a single person compared to for a parent and child. And what is the premium for the Rutgers student health plan?

You also need to see if there is a financial incentive from your company if you waive your company insurance coverage, Kane said, and what Medicare will cost based on your income.

Then see which plan or plans provide the best coverage for the cost, Kane said.

You’re right that Medicare won’t cover your child.

“Before deciding which insurance coverage to keep or add, you’ll need to understand eligibility, cost and coverage as it relates to your company plan, how Medicare coverage is handled in combination with your company plan, and the student plan offered at Rutgers,” she said.

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This story was originally published on Jan. 22, 2022.

NJMoneyHelp.com 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.