Do You Need to Sign Up for Medicare at 65 if You’re Still Working?
By Jesse Giordano, CFP®, CAP®, RLP®, CBEC® | October 25, 2024As you approach your 60s, a number of important questions begin to present themselves: When should I retire? How can I optimize my Social Security benefit? And, our focus today: when should I sign up for Medicare?
Medicare can be confusing for anyone. In fact, a survey of 1,142 Medicare-eligible individuals indicates widespread confusion, where only:
- 20% of Medicare-eligible individuals have a good understanding of Original Medicare
- 31% have a good understanding of Medicare Advantage1
As wealth advisors specializing in retirement planning, we understand the intricacies of Medicare and its implications for your financial well-being. We’re committed to empowering you with the knowledge and clarity you need to make informed decisions.
This article can serve as the starting point in your Medicare journey as we provide a foundational overview of the program and its various components.
Let’s start by exploring how the program works and ways to enroll. Medicare & You 2025: The official U.S. government Medicare handbook is a fantastic resource and the source of much of the information we’ll be sharing.2
Medicare: Your Retirement Healthcare
Medicare is the federal health insurance program for those 65 and older (it’s also available for certain younger individuals with disabilities). There are two main coverage options: Original Medical and Medicare Advantage. This table covers some of the basics:
| Original Medicare | Medicare Advantage (also known as Part C) |
| Includes:
You can add Part D, a separate Medicare drug plan, to get Medicare drug coverage. You can use any doctor or hospital that takes Medicare, anywhere in the U.S. You can also shop for and buy supplemental coverage that helps pay your out-of-pocket costs (like your 20% coinsurance). |
Medicare Advantage is a Medicare-approved plan from a private company that offers an alternative to Original Medicare.
These plans include Part A, Part B, and usually Part D. In many cases, you can only use doctors who are in the plan’s network. You may also need to get approval from your plan before being covered for certain drugs or services. Plans often have different out-of-pocket costs than Original Medicare or supplemental coverage like Medigap. You may also have an additional premium. Plans may offer some extra benefits that Original Medicare doesn’t.
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Choosing between Original Medicare and Medicare Advantage is a significant decision. Original Medicare offers greater flexibility in choosing doctors and hospitals, while Medicare Advantage plans often have lower premiums but may restrict your provider network. Evaluate your options on Medicare.gov’s Compare Original Medicare & Medicare Advantage.3
We also want to offer caution about the potential financial risks of not choosing supplemental insurance, or Medigap, when enrolled in Original Medicare. Original Medicare doesn’t cap out-of-pocket expenses, nor does it cover certain costs (prescription drugs, dental, vision, and hearing services, among other things). Without supplemental insurance, you could be responsible for significant medical expenses, particularly in the event of illness or injury.
When to Enroll & How to Sign Up
The decision of when to enroll in Medicare can be complex, especially for those still working at 65. Here’s a breakdown of key factors to consider:
- Employer’s Health Plan: If you have health insurance through an employer with 20 or more employees, you might not need to enroll in Medicare right away. However, enrolling in Medicare Part A can still be beneficial because it can serve as secondary insurance.
- Employer’s Health Plan Size: If your employer has fewer than 20 employees, you’ll need to enroll in Medicare Parts A and B because it will be your primary insurance.
- Health Savings Account (HSA): If you’re saving to HSA, you should delay enrolling in Medicare Part A and Part B. Medicare enrollees can’t contribute to an HSA.
- Social Security Benefits: If you’re already receiving Social Security benefits, you’ll automatically be enrolled in Medicare Parts A and B when you turn 65.
- Late Enrollment Penalties: Most people need to enroll in Medicare Part B when they turn 65 to avoid a late enrollment penalty.
- Special Election Period (SEP): If you’re covered by a group health plan through your employer, you may qualify for a SEP. This allows you to sign up for Part A and/or Part B during an 8-month period after your employer’s coverage ends.
When you’re ready to sign up, you’ll do so on the Social Security website.4
Important Dates:
- October 1, 2024: Start comparing Medicare plans for 2025
- October 15 – December 7, 2024: Medicare Open Enrollment Period — make changes to your coverage for 2025
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- January 1, 2025: New Medicare coverage begins
We understand that Medicare enrollment can be a source of stress during an already complex time. Our team is dedicated to providing personalized guidance and support as you navigate this process and its impact on your financial goals. Get in touch with us here if you’d like to learn more.
Sources:
1Hidden Crisis: The Medicare Enrollment Maze. Sage Growth Partners and Healthpilot.
2Get started with Medicare. Medicare.gov.
3Compare Original Medicare & Medicare Advantage. Medicare.gov.
4Sign up for Medicare. Social Security Administration.
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