Medicare Coverage for Employed Clients Aged 65 and Older
As more people decide to work past age 65, complicated Medicare cases will become more common. As an advisor, it’s vital you understand these nuances with Medicare so you can share them with your clients. Here are some of the complex issues that can be costly for clients aged 65 and older who are navigating Medicare while still working.
Learn more about Medicare rules, definitions, and explanations: Download the Medicare Agent Guide
Employer Health Coverage After Age 65
Yes, your client can continue with their Employer Group Health Coverage after turning 65. However, if they work for a small company of less than 20 employees, they likely also need to sign up for Medicare Part A and Part B. Employer health coverage plans coordinate benefits with Medicare and, in most cases, only cover the amount that Medicare does not cover. Advise your client to reach out to their employer’s human resources department or contact their health plan to find out what their plan does and does not cover for individuals who are 65 years old and eligible for Medicare.
Additionally, when considering employer coverage after age 65, your client needs to find out if their plan is creditable to avoid a Part D penalty. If your client has a very high deductible plan, this could be considered not creditable (as good as Medicare Part D or better). The client would only need to sign up for Medicare Part A and then enroll in a Part D plan to avoid a lifetime of penalties.
Should your client remain on employer coverage? Or should they sign up for Medicare and either a Supplement or Advantage Plan at age 65? This is truly a case-by-case situation based on price and benefits. It is best to weigh the costs and benefits side-by-side and let your client make the decision. Keep in mind that if your client is the employee and they have dependents on the plan, their decision to end coverage will impact the dependents.
Health Savings Accounts (HSAs) and Medicare
Yes, your client can continue to contribute to their HSA account as long as they do not sign up for Medicare Parts A and B. If your client decides to continue to contribute after age 65, they must stop contributing six months prior to their planned sign-up date for Part A. Medicare will retro-activate Part A back six months, or to their first eligible month when turning 65, whichever is the closest. (Stopping contributions prior to age 65 is not necessary.)
Can your client use their HSA dollars while on Medicare? Yes. Not only can they use the account to pay as they have before age 65, but they can also use it to pay their Part B premiums or premiums for Medicare Advantage Plans or Prescription Drug Plans. However, they cannot use their HSA dollars to pay for their Medicare Supplement (Medigap) premiums.
COBRA Insurance and Medicare
COBRA is a very complicated issue when it comes to Medicare. The best advice is to have your client sign up for Medicare Parts A and B when they are eligible—either at age 65 (if already on COBRA), or when their Employer Group Health Coverage ends (if working past age 65). COBRA is not creditable coverage for signing up for Medicare Part B, which may cause several issues for your client once they try to sign up. This also typically requires Medicare Part A and B enrollment as part of the coordination of benefits once eligible for Medicare. Otherwise, the client might be responsible for some unexpected bills.
If you have questions about a specific case you are working on, please feel free to contact La Rae Mills. We are happy to help you become a trusted Medicare advisor for your clients.