Employers: Are Your Employees Deferring Medicare?

Retirement doesn’t always mean an employee breaks clean from work the day they turn 65. For many individuals, working past age 65 is the right choice for their lifestyle. Some are interested in keeping their benefits, while others want to continue pursuing financial goals. But if your employees are working past 65, they should still be up to date on how Medicare applies to them.

Many people don’t realize that if they (or their spouse) plan to continue working beyond age 65, they must take important steps towards deferring Medicare benefits and maintaining employer insurance. Otherwise, it could lead to unpleasant surprises: lifetime penalties, periods without health coverage, and even insurance claim issues.

Medicare Deferment: Factors to Consider

Employee options for deferring Medicare depend on the size of your company. When workers reach age 65, they can only defer Medicare Part B if their organization has 20 or more employees. If an employee is working past 65 and covered by company health insurance, it may make sense for them to defer some or all of their Medicare benefits (in this case, Part A and Part B).

Even if an employee isn’t retired, they can still enroll in Medicare Part A at age 65. This could help with some of the costs that employer insurance does not cover. Enrollment in Part A may conflict with the employee’s contributions to a health savings account, so they should consult with your organization’s human resources department before enrolling. Part A enrollment is also mandatory if an individual receives Social Security benefits.

In most cases, individuals who are working past age 65 can defer Medicare Part B with few or no issues. However, if your company employs fewer than 20 people, employees must sign up for Parts A and B when they turn 65. In that case, Medicare pays their insurance claims first. Employer coverage then pays second on the remaining balance.

When Can Employees Defer Medicare?

If an employee plans to defer Medicare, they should defer during their first enrollment opportunity: the initial enrollment period (IEP). The IEP is a seven-month window that begins three months before their sixty-fifth birthday, includes their birth month, and ends three months after their birthday.

To defer Part B, employees should call 1-800-MEDICARE. Because each situation is unique, workers should start by speaking to a Medicare representative to determine their first steps.

Enrolling in Medicare Part B at Retirement

So long as employees take all the right steps while they are still working, they will transition smoothly from employer coverage to Medicare. Once an individual retires and no longer has employer coverage, they will have an eight-month window—called a special enrollment period (SEP)—during which they can enroll in Part B without penalties. This assumes the worker is past their seven-month IEP.

COBRA and retiree insurance are not considered active employer coverage, so if an individual is covered by one of those options and does not sign up for Part B within the eight-month window, they will have to pay the Part B late enrollment penalty.

Guiding your employees toward enrolling in Medicare doesn’t have to be confusing. Reach out to RetireMEDiQ at 1-866-407-5180 or visit www.retiremediq.com/free-medicare-guide to speak with a trusted advisor.

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