According to the Bureau of Labor Statistics, about 9.8 million individuals 65 and older worked in the workforce in 2021. Although you can receive Social Security benefits as early as 62 years old, many people choose to work until their full retirement age (FRA) or beyond. It is essential for those approaching age 65 to know you’ll be eligible for Medicare at that age. If you work full-time when you become Medicare-eligible, here is how Medicare, different Medicare plans, and employer coverage coordinate.

Large employer coverage with Medicare

A large employer is an employer with 20 or more employees. Large employer insurance is considered creditable coverage for Medicare. Therefore, if you work full-time for a large employer at 65, you can delay Medicare past 65 with no penalty. You can continue to work full-time and be covered by the employer insurance.

If you want to enroll in Part A only while under the employer coverage, you can as long as you are not contributing to a Health Savings Account (HSA). Many people will enroll in Part A for secondary hospital coverage and delay Part B since Part B has a monthly premium. Whether you enroll in Part A only or Part A and Part B, your large employer insurance will always be primary while you actively work for that employer.

Small employer coverage with Medicare

A small employer is one with less than 20 employees. Small employer insurance is not creditable for Medicare, and therefore, you will need to enroll in Medicare Part A and Part B while you work for a small employer. Medicare Parts A and B will be primary to the small employer insurance while you actively work full-time.

Since you will need to enroll in Medicare Part B, you must pay the Part B premium in addition to your employer plan.

Do I need a Medigap plan or Advantage plan while I work?

You do not need a Medigap plan or Medicare Advantage plan when you have employer insurance. The employer insurance will either be primary or secondary to Original Medicare. A Medigap plan would likely be a waste of money as it may not cover any costs. Additionally, an Advantage plan could cause coordination of benefits issues since you have employer coverage.

However, it is important to know that you can opt out of your employer insurance. You can keep Medicare and choose one of these plans rather than staying with the employer insurance.

Another option is to apply for these types of plans after you retire and come off the employer insurance. You may qualify for Guaranteed Issue when you apply for a Medigap plan. This means you will have a 63-day window to apply for a Medigap plan with no health questions asked.

You’ll have a 2-month Special Election Period window from the day you lose coverage to apply for an Advantage plan.

Is Part D necessary when working full-time?

While you work full-time for an employer, you likely won’t need a Part D plan. However, whether you have a large employer or a small employer, you’ll want to verify with them that the prescription coverage is creditable for Medicare. If it is, you can delay Part D with no penalty. If it isn’t, you could receive a Part D late enrollment penalty in the future if you don’t apply when first eligible for Medicare.

Your employer should send an annual letter to all insurance enrollees stating if the prescription coverage is creditable for Medicare. You can hold onto those documents as you delay Part D.

Once you come off employer coverage, you’ll be given a 2-month Special Election Period window to apply for a Part D plan.

Summary

In conclusion, you can actively work full-time while enrolled in Medicare. The number of employees will determine how the employer insurance will coordinate with Medicare. You can choose to keep the employer insurance along with Medicare or choose a Medigap plan or Advantage plan. You’ll always want to choose whichever option will be most cost-effective.