25 Oct I’m retiring with health insurance. Do I also need Medicare?

Q. I am a teacher retiring in 18 months at the age of 67. I do get full medical coverage when I retire. Do I also need to sign up for Medicare? I am getting conflicting answers so I need clarifications.
— Planning

A. Congratulations on your retirement.

It’s important to consult with a professional or directly with Medicare to get advice tailored to your specific circumstances.

But let’s explain Medicare.

Medicare is a federal health insurance program primarily for people who are 65 or older, regardless of whether or not they are retired, said Michael Green, a certified financial planner with GYL Financial Synergies in Parsippany.

“Since you are retiring at the age of 67 and will have full medical coverage, it’s likely that your employer-provided coverage will work together with Medicare,” he said.

The initial enrollment period is when you turn age 65. The enrollment period remains open for seven months, and begins three months before you turn 65 and ends three months after the month you turn 65, he said.

“It is important to note that if you miss your seven-month initial enrollment period you may have to wait to sign up and pay a monthly late enrollment penalty for as long as you have Part B coverage,” Green said. “The longer you wait, the higher the penalty increases.”

Medicare Part A is hospital insurance and is usually premium-free for people who have worked and paid Medicare taxes for at least 10 years or 40 quarters, Green said.

You will likely be enrolled in Part A automatically when you turn 65, and you should accept it, he said.

Medicare Part B is medical insurance that helps cover outpatient care, he said.

Part B usually comes with a monthly premium.

“If you’re already receiving Social Security benefits when you turn 65, you’ll be automatically enrolled in Part B,” he said. “If not, you will need to sign up.”

He said because you have employer-provided coverage, you may choose to delay enrolling in Part B without penalty as long as your employer coverage is considered “creditable.”

“Creditable coverage means that it is expected to pay, on average, as much as Medicare’s standard prescription drug coverage,” Green said. “Many retirees will use

Medicare as their primary health insurance coverage and their former employee’s insurance as secondary/supplemental coverage.”

Medicare Part D is prescription drug coverage.

If your employer-provided coverage doesn’t include prescription drug coverage that’s at least as good as Medicare’s, you may want to consider enrolling in a Part D plan when you’re first eligible, Green said.

“If you delay enrolling in Part D and don’t have creditable prescription drug coverage for 63 consecutive days or more, you might have to pay a late enrollment penalty if you join a Part D plan later,” he said.

This is all why it’s essential to speak with your benefits administrator or a Medicare representative about how your employer-provided coverage will work with Medicare. They can provide specific guidance based on the details of your plan, Green said, noting that you should consider your individual health needs and budget when making decisions about Medicare coverage.

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This story was originally published on Oct. 25, 2023.

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.