Medicare eligibility begins at age 65, and you get a seven-month window to enroll that begins three months before the month of your 65th birthday and ends three months after the month of your 65th birthday. If you don’t sign up on time, you’ll face a lifelong surcharge on your Medicare Part B premiums, which is why seniors are generally advised to enroll during that initial window.
The rules are different, however, if you’re still working at age 65 and have coverage under a group health plan through work. As long as you have access to health insurance and work for a company with 20 or more employees, you get a special Medicare enrollment period that begins once your health coverage ends or once you separate from your employer — whichever happens first. As such, you don’t have to worry about facing a Part B premium surcharge if you don’t sign up at or around 65.
But just because you have a group health plan through work doesn’t mean you shouldn’t sign up for Medicare anyway. In some cases, enrolling right away still makes sense, even if you’re already covered.
Comparing your costs
Though Medicare Part B, which covers doctor visits and diagnostics, charges enrollees a premium, Part A, which covers hospital care, is free for most folks who sign up. As such, it pays to enroll in Medicare Part A at the very least, even if you have a health plan through work. This way, Medicare will serve as your secondary insurance and perhaps cover services your primary insurance plan won’t pay for. The only exception is if you’re contributing to a health savings account; you can’t be enrolled in Medicare and continue funding one, so take that under consideration.
Now Medicare Part B does charge a premium for coverage. The standard Part B premium is $135.50 a month, though higher earners can pay more. There are additional costs associated with Medicare coverage as well. For example, under Part B, you’ll be liable for a $185 annual deductible, and you’ll usually pay 20% of the Medicare-approved amount of the care you receive. This means that if a test or treatment costs $100, you’ll be on the hook for $20.
There are costs associated with Part A, too, even though there usually isn’t a premium involved. Specifically, you’ll pay a $1,364 deductible for each benefit period you’re receiving hospital care, plus coinsurance per day once you’ve been in the hospital for a certain point.
And don’t forget about Part D. If you give up your group health plan through work and get Medicare instead, you’ll need it for prescription coverage, which means you’ll pay a premium for your plan itself, plus copays on your medications.
That said, if you’re paying a small fortune for your group health plan through work, and you’re subject to hefty deductibles and copayments, then it makes sense to run the numbers and see if coverage under Medicare will end up saving you money. This could end up being the case if your premiums aren’t generously subsidized by your employer, or if you happen to have an unusually expensive plan.
If your group health plan offers a relatively narrow scope of coverage, it might also make sense to look at Medicare and see if it’ll better serve your needs. Keep in mind, though, that there are a number of essential health services that Medicare won’t pay for, like dental care, vision, and hearing aids, so be sure to review not only your costs, but also, the coverage you’re entitled to under each plan option.
What’s the best choice for you?
Much of the time, sticking with a group health plan through work will make more financial sense than getting on Medicare (aside from Part A). But if you happen to have a lousy or extremely expensive plan through work, then Medicare could be a better solution. Run the numbers and see where you’re most likely to come out ahead before landing on a final decision.