Working Past 65
Turning 65 and Working for a Small Employer: Do You Need Medicare?
You plan to keep working after 65, and your employer is letting you stay on the company health plan. It may seem like Medicare can simply wait.
Before making that decision, find out how many employees your employer has.
For someone age 65 or older with health coverage based on current employment, employer size can affect which coverage pays first. That can make the Medicare decision very different for someone working at a small company than for someone working at a larger employer.
Why does employer size matter after 65?
Medicare uses coordination-of-benefits rules to determine which coverage generally pays first when you have both Medicare and an employer group health plan.
For someone age 65 or older whose coverage is based on their own or a spouse's current employment, CMS says the employer group health plan generally pays first when the employer has 20 or more employees. Medicare generally pays second.
When the employer has fewer than 20 employees and isn't part of a qualifying multi-employer arrangement, Medicare generally pays first and the employer group health plan pays second.
Does that mean I need Medicare at 65 if my employer has fewer than 20 employees?
This is where you should be careful about using the general advice that people can simply delay Medicare while they're still working.
Medicare's current enrollment guidance specifically tells people with job-based insurance from an employer with fewer than 20 employees to check with the employer about enrolling in Parts A and B when they're first eligible.
Medicare also warns that the job-based plan might not pay for healthcare services if you don't have both Part A and Part B.
That makes it important to verify how your particular employer plan coordinates with Medicare before deciding to delay enrollment.
What happens when Medicare is the primary payer?
The primary payer processes a covered claim first. The secondary payer may then pay some or all of the remaining covered amount according to its own rules.
If Medicare is supposed to be primary but you haven't enrolled, don't assume your employer plan will simply take Medicare's place and pay everything as though it were primary coverage.
Ask the employer or benefits administrator exactly how the group plan handles claims for Medicare-eligible employees and spouses.
What if the company has exactly 20 employees?
The Medicare coordination rule generally changes at 20 employees for people who are Medicare-eligible because of age.
CMS says that when an employer has 20 or more employees and the coverage is based on current employment, the group health plan generally pays first and Medicare pays second.
But don't determine the answer from a casual head count around the office. Employer structure and multi-employer arrangements can affect how the rule applies.
What if my small employer participates in a multi-employer health plan?
This is an important exception to the simple fewer-than-20 rule.
CMS says that if a small employer participates in a multiple-employer or multi-employer group health plan and at least one participating employer has 20 or more employees, the Medicare Secondary Payer rules can apply to people associated with the smaller employer too.
There is also a formal Small Employer Exception process for certain multi-employer arrangements.
Because you usually can't determine that just by knowing the size of your own workplace, ask the benefits administrator whether the plan is a multi-employer plan and which coverage is primary for Medicare-eligible employees.
What if the insurance company says I can stay on the employer plan?
Being allowed to remain enrolled and knowing which coverage pays first are two different questions.
Your employer may allow you to keep the group health plan after 65. That alone doesn't establish whether the plan will pay primary or secondary once you're Medicare-eligible.
Ask specifically: “When I become eligible for Medicare at 65, does this plan pay primary or secondary?”
That question is more useful than simply asking whether you can keep the insurance.
Does my spouse's employer coverage count too?
It can. Medicare's coordination rules for people age 65 or older can apply when the group health coverage comes from your own current employment or your spouse's current employment.
The same employer-size question still matters. If you're approaching 65 while covered through a working spouse, verify the size and structure of the employer providing the coverage and ask how the plan coordinates with Medicare.
What if I have an HSA through the small employer?
An HSA adds another timing issue because you can't continue making HSA contributions once you're enrolled in Medicare.
Don't solve the employer-size question by immediately enrolling in Medicare without also checking how Medicare enrollment would affect your HSA contributions.
The payer rules and the HSA rules are connected to the same transition, but they answer different questions.
Four questions to take to your benefits administrator
Before deciding whether to delay Medicare, ask:
- How many employees are counted for Medicare coordination purposes?
- Is this a single-employer or multi-employer group health plan?
- When I become Medicare-eligible, does this plan pay primary or secondary?
- Does the plan require me to have Medicare Parts A and B for the employer coverage to pay correctly?
Get the answers before your Medicare enrollment window passes rather than discovering the coordination rules after a medical claim occurs.
Working past 65 doesn't create one Medicare rule for everyone
Two people can both be 65, both still working, and both covered through their employers — yet have very different Medicare decisions because one works for a company with 12 employees and the other works for a company with 200.
Golden Milestone Services is an independent insurance agency that helps people understand their Medicare options and how Medicare may coordinate with the coverage they already have. Assistance is available in both English and Hmong.
If you're approaching 65 and plan to keep working, don't stop at the question, “Do I have employer insurance?” Find out who pays first. That answer can change what you need to do next.
Common questions
Do I need Medicare at 65 if I work for a company with fewer than 20 employees?
Don't assume you can delay Medicare simply because you're still working. Medicare says that with an employer of fewer than 20 employees, your job-based coverage might not pay for healthcare services if you don't have both Part A and Part B. Verify how your employer plan coordinates with Medicare before deciding when to enroll.
Who pays first if my employer has fewer than 20 employees?
For someone age 65 or older with group health coverage based on current employment, CMS says Medicare generally pays first and the group health plan pays second when the employer has fewer than 20 employees and isn't subject to the multi-employer rules.
Who pays first if my employer has 20 or more employees?
For someone age 65 or older with group health coverage based on their own or a spouse's current employment, the employer group health plan generally pays first and Medicare pays second when the employer has 20 or more employees.
What if my employer has fewer than 20 employees but uses a multi-employer health plan?
The answer can be different. CMS says Medicare Secondary Payer rules can apply when a small employer participates in a multiple-employer or multi-employer plan where at least one participating employer has 20 or more employees. Ask your benefits administrator how your specific plan is treated.
Can I stay on my small employer's health insurance after 65?
Your employer may allow you to remain on its health plan, but that doesn't by itself determine which coverage pays first. Ask the plan whether it will be primary or secondary once you're Medicare-eligible and whether Medicare enrollment is required for the employer coverage to pay correctly.
Does the 20-employee rule apply if I'm covered through my working spouse?
It can. For people age 65 or older, Medicare's coordination rules can apply to group health coverage based on your own current employment or your spouse's current employment. Verify the employer's size and plan structure with the benefits administrator.