Employer Health Insurance and Medicare: When to Enroll in Medicare if You Have Employer Coverage

You’re turning 65. Happy birthday! You are now eligible to enroll in the federal Medicare program, but you want to continue to work, and your employer has group health insurance.

What do you do? Stay on your employer’s health plan? Enroll in Original Medicare? Both?

There are many considerations if you are in this position. Let’s dive in!

Is your employer’s insurance creditable?

This is the very first question you need to get answered. If your employer’s group plan is not considered creditable insurance and you delay enrollment into Medicare, you will be penalized.

What makes insurance creditable? A creditable insurance plan offers coverage that is as good as having Medicare Part A and Part B. This means that the plan meets the same standards that Medicare has.

Most often, creditable coverage comes in the form of a group policy, like those offered through an employer. However, group insurance is only deemed “creditable” if the employer has large employer coverage, meaning that it employs at least twenty people.

Creditable coverage for Medicare Part D prescription drug plans is common. Your current non-Medicare plan must meet the following set of criteria:

• The plan must pay a minimum of 60% of the cost of the prescription;
• The plan must provide coverage for generic and brand-name prescriptions;
• The plan must allow the member to use multiple pharmacies; AND
• The plan must either have a low deductible or no annual benefit cap

Those with creditable group health plan coverage can delay enrolling in Medicare Part B and Part D without accumulating late enrollment penalties.

Don’t assume you know if your plan is or is not creditable. Instead, make a quick call to your HR department and find out for sure.

Can my employer force me to choose Medicare over their group health coverage?

No, your employer cannot force you to enroll in Medicare instead of the employer’s group health coverage.

Medicare Part A Enrollment

As long as you have met the requirements to obtain premium-free Medicare Part A, there is usually no reason not to enroll in Part A as soon as you are eligible. There is no monthly premium with Part A, so adding this coverage to your employer’s plan can only increase your amount of health insurance coverage and benefits.

The only scenario when you may want to postpone Part A is if you are contributing to a Health Savings Account (HSA). You cannot be enrolled in any part of Medicare while contributing to an HSA. Doing so will cause you to incur tax penalties.

Medicare Part B Enrollment

If you have creditable coverage through your employer, you may still choose to enroll in Medicare Part B, with the understanding that you will have to pay the monthly premium. In 2023, the monthly premium is $164.90.

Even considering the monthly premium, continuing your coverage on your employer’s plan is often a great benefit. The group plan typically offers a broader range of services like prescription drug coverage, vision, hearing, dental, and workers’ compensation. These are not services that are covered in Medicare Part B. 

Having two forms of insurance can greatly reduce your out-of-pocket costs.

Medicare and Employer Insurance: How They Work Together

Most often, Medicare pays as the secondary insurance provider. This means that Medicare coordinates benefits with the employer’s health plan.

CMS.gov has a very informative booklet titled Medicare Secondary Payer if you need more information about coordinating benefits.

Special Enrollment Period

The Special Enrollment Period is only available for those who meet specific criteria.

• The individual had creditable group insurance;
• The individual develops a qualified disability; OR
• The individual’s employer coverage was canceled no more than eight months prior

So, if you have elected to delay enrollment because you’ve been covered under a creditable group plan, you may enroll in Medicare Part B and D as well as any additional policies like a Medigap or Medicare Advantage Plan.

If you have excellent employer health benefits that include creditable coverage, there are many benefits to having both Medicare and your group policy or delaying enrollment and saving on Medicare premiums.

No matter which option you choose, make sure you have considered your unique healthcare needs and medical expenses and that you fully understand the intricacies of Medicare enrollment.

Still have a few questions? Call a licensed insurance agent at Sunflower Insurance Solutions today!