If you’re at least 65 and still punching the clock at work, odds are that you have two benefit enrollment periods to worry about this year.
That’s because in addition to signing up for next year’s workplace health benefits, older workers must also make sure to coordinate their coverage with their eligibility for Medicare.
The ordeal is a confusing one for the growing population of older workers. By 2024 there will be about 13 million individuals age 65 and older in the workforce, according to the Bureau of Labor Statistics.
“Some people are allowed to defer into the future, and some aren’t deferred and need to take Medicare,” said Katy Votava, president and founder of Goodcare.com, a health-care consulting firm.
Whether to take Medicare is only the start of the confusion. For seniors who have access to a health-care plan at work and Medicare, there’s also the question of which coverage will pay out first.
Here’s what you should know.
Whether you are required to obtain Medicare will depend on the size of your employer.
Firms with fewer than 20 insured workers are allowed to require older employees to enroll in Medicare when they reach eligibility age at 65.
If you work for an employer with 20 or more employees, then your company is required to continue offering you insurance — regardless of your age.
Under normal circumstances, newly eligible individuals who are no longer working have a seven-month initial enrollment period to enroll.
In that case, individuals who fail to sign up for Medicare Part B when they are first eligible may have to pay a late-enrollment penalty of 10 percent for each 12-month period for which they were eligible but failed to sign up. That penalty remains for as long as you’re enrolled.
The rules are different for older adults who are still employed.
If you’re still working, you are eligible for an eight-month special enrollment period — in which you can sign up for Medicare without a penalty — once you or your spouse lose employer coverage.
Be aware that retiree health benefits and coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA — the extension of employee health benefits to individuals who would otherwise lose them due to termination — do not count as employer coverage.
This means you may still be subject to Medicare penalties if you fail to enroll in a timely fashion.
If you have a comprehensive health plan at your employer, particularly one that includes dental and vision coverage and has low deductibles, it may make sense to stick with your current plan and defer on Medicare if you can.
However, if your workplace plan is especially costly, you might want to rethink that.
For instance, consider the growth of high-deductible health insurance plans at work, which have minimum deductibles of $1,350 for self-only coverage and $2,700 for family plans.
“If you need to have $5,000 in expenses before the insurance kicks in at work, depending on the nature of the costs, Part A or B could be secondary coverage and help you pay for those deductible expenses,” said Philip Moeller, author of “Get What’s Yours for Medicare.”
High-deductible plans come with health savings accounts, which you may not contribute to once you’ve enrolled in Medicare. Still, you may use your balance to help pay for qualified medical expenses.
You might also do some research and price out the cost and coverage of either original Medicare, plus Part D prescription coverage, or Medicare Advantage.
Medicare Advantage covers Parts A and B, which include hospital and medical insurance, plus other benefits.
Find out how those options compare to remaining in a high-deductible plan at work, especially if you can’t participate in the health savings account.
“See what makes the most sense for you,” Moeller said.
Though maintaining both your employer’s plan and enrolling in Medicare may help provide you with comprehensive coverage, it brings in more complexity: Which insurance plan is on the hook first?
That depends on the size of your employer and other factors, according to Moeller.
If you’re at least 65 with workplace coverage and your employer has at least 20 covered employees, then your employer plan is the primary payer for your claims.
If your employer has fewer than 20 covered workers, then Medicare pays your claims first.
Head off Medicare and health insurance coordination issues by asking your workplace benefits administrator a few questions:
What are the consequences of dropping workplace coverage if I choose to have only Medicare? Employers save money on group health insurance by keeping more people covered, so find out if participation in the plan is a condition of employment, said Moeller.
“There could be consequences if you drop your employer coverage,” he said. “You might not get it back again.”
What’s the coordination of benefits? Save yourself a lot of confusion and ask whether your workplace plan will be the primary or secondary payer when you’ve filed a medical claim.
What are my workplace coverage options? This enrollment season, see if your employer offers other forms of coverage in addition to high-deductible plans.