Yes, You Can Sign Up for Medicare While You’re Still Working

A doctor smiles as he writes on notepad while speaking with an older female patient.

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As inflation and a rocky stock market continue to eat away at the nest eggs of older workers approaching retirement, working longer than expected is increasingly on the table. But a recent Allsup survey found that fully one-third of those nearing retirement age (62-64) who plan to keep working past 65 don’t understand they can sign up for what is often more affordable Medicare coverage, even while they’re still employed.

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With retirement perhaps further away for many, individuals need help understanding their options. Plus, employers can ensure their workforce has access to expert health insurance assistance to make the best decisions for their own situations.

Here are some answers to common questions surrounding retirement postponement and Medicare coverage, including common misperceptions:

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When should I plan to retire? And why is the average retirement age rising?

Your retirement decision is entirely personal and dependent on your circumstances. Most employees now expect to retire around age 71. Employees in their 60s have been making the decision to work longer. While some are relatively positive about working past 65, about half of those individuals have continued working primarily to maintain their health insurance. Access to health coverage is one of the main reasons the average age at which people retire is increasing. In a survey of more than 1,000 American older workers, 31% of those with employer insurance say health care is their primary reason for working, and 53% say it’s one factor.

Whether you are continuing to work based on career fulfillment or health coverage, having a plan in place for how you’ll handle your Medicare decisions before you turn 65 can streamline the transition off of your employer-sponsored health insurance.

For most working seniors, the answer is no. While enrolling in Medicare is often a viable alternative to their company’s coverage, it’s not required that all seniors make the jump as soon as they turn 65.

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However, there are some cases where it is mandatory and it’s important to be aware of these exceptions to ensure there are no gaps in your coverage. For instance, in companies with fewer than 20 employees, Medicare is the primary payer, meaning that seniors must sign up as soon as they are eligible. If you delay your signup, you might end up paying for it: Your company’s group plan can deny your claims if they find you are eligible for Medicare — footing you with the bill. On top of that, there are financial penalties for late enrollment, so if you work for a small company, it’s essential you are ready to make the leap to Medicare coverage, regardless of your retirement plans.

Is Medicare better than my employer-sponsored coverage?

Employees who are approaching retirement, and those who have reached retirement age, say they are mostly content with their employer health benefit packages. However, hesitation and misconceptions about Medicare prevents workers from shopping for potentially better plans.

At Allsup, we found that one-third of employees 65 and older who are eligible have not enrolled in Medicare because they don’t think coverage will be as good as their employer’s insurance. However, our same research also found that 88% of those who are enrolled in a Medicare plan report having comprehensive coverage. On top of that, Medicare options could actually provide better coverage for many employees — and at a lower cost than an employer plan.

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If Original Medicare is unaccompanied by a prescription drug plan (Part D) or a Medigap supplement, it may not live up to your current employer-sponsored level coverage. But most individuals who sign up for Medicare do not sign up for Original Medicare by itself. It is highly recommended to pair your Original Medicare plan with a prescription drug plan and a Medigap plan. Each Medigap plan (plans A to N) offers a different level of coverage that demands careful consideration in terms of weighing which plan best fits your needs.

Another option, aside from Original Medicare plus a Medigap plan, would be to elect a Medicare Advantage plan (Part C).The good news is Medicare Advantage plans tend to be inexpensive, with some having no monthly premium. In comparison, employer coverage can be susceptible to sudden changes in costs from year-to-year. As inflation climbs, employers often negotiate with health insurance carriers to reposition their offerings to place more out-of-pocket costs on the employee, such as higher deductibles and copays. If you find your employer-sponsored plan is increasing in price, Original Medicare plus a Medigap plan, or a Medicare Advantage plan, may be the better primary coverage for you.

What should I prioritize in my health care coverage?

Premium cost is usually king when shopping for health insurance plans. But the variety of health insurance provisions, such as deductibles, co-pays and coinsurance – can lead some people to focus on total out-of-pocket costs. Our research found that those who are under 65 prioritize the financial aspects of their health care, but those who are over 65 tend to prioritize scope and quality of care in their decisions.

You should recalibrate your health insurance plan annually, depending on your evolving health care needs and financial goals. If you need to cut costs, factors such as annual deductible costs and co-pays due at the time of service will take precedence. However, if you have certain prescriptions or medical services you seek on a regular basis, such as prolonged therapy, you may need to prioritize access and scope of coverage.

When is the best time to shop for Medicare?

When you become eligible for Medicare, conducting side-by-side comparisons can help you identify the coverage for services across all types of Medicare and Medicare Advantage plans. It is always ideal to shop for plans during the Medicare Annual Enrollment Period, Oct. 15-Dec. 7, because coverage terms may change and care options may fluctuate with trends and networks from year-to-year.

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Making a close comparison of premiums, deductibles, co-insurance, access to providers and benefits can help you save money and choose a plan that is more personalized to your changing health needs and financial goals.

Bethany Cissell is a health care insurance services specialist at Allsup.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Bethany Cissell, a health care benefits expert, has been with Allsup for about 10 years and has experience in federal disability and health insurance programs, such as Social Security Disability Insurance (SSDI) and Medicare. This includes knowledge of Medicare plan selection and Medicare benefits coordination with private health insurance plans. She serves as Health Care Insurance Services Account Manager and oversees the operations team assisting Allsup customers, including employees, former employees and retirees. She is regularly involved in the successful implementation and delivery of services to more than 250 organizations nationwide, including a large selection of Fortune 1000 employers.