Still Working at 65? Medicare Advantage May Be a Better Option Than Your Employer's Plan

Points to Consider

• If you are still planning to work when you turn 65, you may enroll in a Medicare Advantage plan while you are still working. You don't have to wait until you retire.
  
  
• You don't have to wait until annual enrollment to drop your employer's plan. You can start coverage mid-year if you so choose. The new eligibility for Medicare is a qualifying change in status.
  
  
• Its important to become familiar with your Medicare options prior to 65 so you can evaluate which approach will provide better value and any potential savings.
  
  
• Since each person's situation is unique as to their preferred doctors, hospital, and prescription drugs, as well as the benefits offered through their employer's plan, there is no way of knowing if such a change should be considered until an analysis is done specifically for you.
  
  
• Potential savings from reduced premiums and lower out of pocket expenses can be directed to your 401(k) retirement savings plan.
  
  
• If your employer has a high deductible plan, you may also preserve the funds you have saved in your health savings account (HSA).  Many Medicare Advantage plans only require a copay for many medical services and many plans have a $0 deductible.
  
  
• While an employer can’t incentivize an employee to go on Medicare, it would be advantageous for an employer to offer employees a resource to help evaluate their option so they can make an informed decision. We can help employees make that determination.
  
  
• If you are already enrolled in a Medicare health plan when you eventually retire after age 65, it streamlines your health care transition.
  
  

Should I Enroll in Medicare at Age 65?
The top question I get from individuals working at age 65 is, “Do I have to enroll in Medicare or can I stay on my employer’s plan?” Well, the answer to that question is, “No, you don’t have to enroll in Medicare at 65 if you are still working and there won’t be a penalty for signing up later when you do finish working.” (For more information on this topic, see "Enrollment Timing: Upon Retirement After Age 65.")

However, if you continue to work after age 65, it would be worthwhile to evaluate whether Medicare may be a better option than your employer’s plan, especially when compared to a Medicare Advantage plan. Since you need to enroll in Medicare Part A and B before you can enroll in a Medicare Advantage plan, it would be best to perform the evaluation well in advance of the month of your 65th birthday.

Elements for Consideration When Evaluating Changing to Medicare at 65 While Still Employed
As with anything, determining the correct course of action is unique to your personal situation. Here are some items you should keep in mind when contemplating such a change.

• Monthly Medicare Part B premium ($174.70 in 2024) is lower than the total of your monthly employer medical, dental, vision, and hearing plan premiums
• $0 dollar monthly premium for many Medicare Advantage plans which include medical and prescription drug coverage
• $0 medical deductible for many plans
• Copays instead of coinsurance for a majority of services
  (For more information on this topic, see "Copays vs. Coinsurance in Medicare Advantage Plans")
• Many advantage plans include dental, vision, and hearing coverage; compare that to the premium you are paying for these plans (if available at all through your employer)
• Prescription drug deductible may not apply to one or more drug tiers
• Many generic drugs have a low copay or a $0 copay
• Separate maximum out of pocket for medical services and prescription drugs
  NEW FOR 2024: Prescription drug coverage now has an annual maximum out of pocket (MOOP) of $8,000
  LOWER PRESCRIPTION DRUG MOOP COMING FOR 2025: $2,000

Many Supplemental Benefits Included at No Cost

• Additional supplemental benefits may include stipend for over the counter (OTC) medications and supplies, fitness membership, and flex card for expenses such as utilities
• Local transportation benefit for doctor visits
• Ability to travel in the U.S. outside your service area and use in-network providers

NOTE: Its highly unlikely for an employer plan to include some of the supplemental benefits noted.

Increase Contributions to 401(k) With Savings from Switch to Advantage Plan
If enrolling in a Medicare Advantage plan can lower many premium costs and out of pocket expenses, you may have the opportunity to redirect those savings into your 401(k) to further build your retirement funds.

Preservation of Health Savings Account (HSA) Funds
If your employer only offers high deductible health plan (HDHP) options, you will significantly reduce your out of pocket exposure and use of HSA funds if you switch to Medicare and enroll in an advantage plan. If you have accumulated a sizable balance of HSA funds, they can easily be exhausted with one claim under your employer plan given the large deductible and out of pocket maximum within many HDHP plans.

Call Us for Help Performing Your Evaluation and Enrolling You in a Medicare Plan
Call us if you would like to see if enrolling in a Medicare Advantage plan at 65 is right for you. As we approach the open enrollment season in the next few months, now is a great time to perform an evaluation to see if such a switch makes sense for your circumstances when making benefits changes for 2024.

Chris Laraway | chris.laraway@cglins.com | 317-483-8040 (recorded line)

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