Choosing Between an Employer Health Plan or Medicare at Age 65
Longer lives, career satisfaction, financial security – all of these are reasons why people choose to stay in the workforce long past 65 years old. Turning 65 may not mean retirement for you, but it still marks the age to turn your attention to Medicare to learn whether it’s the right time for you to enroll.
A few simple steps will help set you on the path that’s right for you.
Step 1
Find out if your group plan is “creditable coverage” according to CMS (Centers for Medicare and Medicaid Services) standards. You should receive a “letter of creditable coverage” every year after you turn 65. Request one if you don’t get one and keep each letter in a safe place with your other important records These letters prove that you did NOT need to sign up for Medicare while covered by your group plan. They protect you from Late Enrollment Penalties for Medicare Part B and Prescription Drug Plans (Medicare Part D) which follow you for the rest of your life.Step 2
Find out if your group insurance will require you to have Medicare Part A and/or Part B, once you turn 65. If they are enrolling you in any part of Medicare, make sure to get a copy of your Medicare ID number and keep it with your other important papers.Many group health plans will automatically enroll you in Medicare Part A, the “in patient” part of Medicare which covers things like hospital stays, rehabilitation facilities and hospice care. By doing so, the group plan has less money on the line if you become ill or injured and you do not have in increase in insurance costs (Medicare Part A does not have a premium for most people).
Group plans with smaller companies may even want you to enroll in both Medicare Part A and Medicare Part B. (Part B is the “outpatient” coverage for doctor’s visits, outpatient tests and surgeries, and durable medical equipment.) Too often employees don’t realize that once they are enrolled in Part B, they lose their guaranteed acceptance at standard rates for Medicare Supplemental Plans within 6 months of enrolling in Part B. If you were considering a Medicare Supplemental Plan such as Plan G for health reasons, be sure you apply within 6 months of your birth month.
Step 3
Compare the costs and coverage of your group plan with Medicare insurance. Typically, the insurance company providing your health policy will offer a summary of benefits and costs each plan enrollment year. Having a copy of the benefits summary will be very helpful when comparing your group coverage with the benefits offered by the different Medicare plans.NOTE: If you are considering switching to Medicare be sure to find out whether or not coverage for your spouse or children will be affected. Planning ahead can save a lot of trouble later.