Medicare & retirement insurance: what if you’re not retiring at 65?
Retirement is a season of life when people look for prudent ways to spend their time and money. The average expected retirement age among U.S. non-retirees is now 66, a six-year difference from 1995. Americans are retiring later than they expect to, and this can affect their Medicare eligibility.
When considering retirement, you should also consider Medicare coverage options. One of the most important decisions you can make as a retiree is what health insurance you’ll need for your future. Developing an action plan is essential.
Let’s look at the Medicare options available to you after retirement, what happens if you keep working past 65, and how to prepare for this change.
What is the Medicare retirement age?
The Medicare retirement age is the age at which a person becomes eligible for Medicare. It’s also called the Initial Enrollment Period (IEP). The IEP begins on the first day of the month following your 65th birthday. In general, you have to be at least 65 years old to get Medicare benefits. However, there are some exceptions to this rule:
How does Medicare work after retirement?
You will automatically receive Medicare Part A (hospital insurance) when you turn 65, regardless of your working status or your employer’s healthcare plan coverage.
You’ll also want to work with your employer’s health plan administrator to understand how their retiree plan works with Medicare. If you decline employer retiree coverage, you may not be able to change your mind and enroll in this coverage later. How many employees your workplace has determines who (Medicare or your retiree health plan) will pay your medical bills first.
If you work for a company with 20 or more employees and receive qualifying health insurance through your job, it might make sense to delay signing up for Medicare Parts B and D that have a premium. If you work for a company with less than 20 employees, you’ll want to sign up for both Medicare Parts A and B when you’re first eligible at age 65.
If you choose to keep working, Medicare coverage options after 65 are dependent on your work history. Suppose you have worked and paid into the Medicare system for at least 10 years. In that case, you will be eligible for Medicare Part A (hospital) and Part B (medical). If not, then you may be eligible for Medicare Advantage Plans.
If you don’t have health coverage from a current or former employer, you should enroll in both Part A and Part B during your Special Enrollment Period. You have eight months to enroll in Medicare Part B and avoid penalty once you stop working or your employer coverage ends – whichever happens first.
If you have COBRA coverage through your employer, you’ll still want to sign up before the eight months expires, as Medicare does not count COBRA as creditable coverage.
Does everyone get Medicare when they retire? No. People ineligible for Medicare after they retire include those who:
The exception is Part B. You can enroll in Medicare Part B as long as you’re at least 65 years old because there is no work history requirement.
What is Medigap?
Medigap is a type of insurance that helps pay for some of the costs not covered by Medicare. It is available to people 65 or older and can help cover some of the costs that Medicare doesn’t cover. It’s also called “supplemental” or “gap” insurance.
The primary purpose of Medigap is to help pay for the out-of-pocket costs that Medicare doesn’t cover, such as copayments, coinsurance, and deductibles. For example, if you have a Medigap plan, you may not have to pay as much for your doctor’s visit or hospital stay.
There are many types of Medicare supplemental benefits that you can purchase to cover the gaps in Medicare coverage. These include Medigap, Medicare Advantage Plans, Medicare Part D Prescription Drug Plans, Medicare Supplement Insurance Plans, and Medicare Cost Plans. Some people may need more than one type of Medicare supplemental benefit, while others may not need any at all.
What you can expect to pay
First, you must know that Medicare does not cover all medical expenses. It only covers some of them and does not cover prescription drugs, dental care, or vision care. Retirees also need to know that Medicare has a monthly premium and an annual deductible. What are your Medicare coverage options in retirement? Here is a breakdown of Medicare Parts A, B, C, and D for retirees.
Parts A – Hospital Insurance – The government usually pays for part A, but some people may have to pay a premium. Part A covers hospital stays, skilled nursing facility care, home health care, hospice care, and other medical services. Most retirees are eligible for premium-free Part A. Enroll in Part A during your Initial Enrollment Period (IEP) in the three months before and after your 65th birthday month.
Part B – Medical Insurance – Part B costs are also typically covered by the government, but some people may still pay a premium. Part B covers doctor visits, outpatient care (such as lab tests), durable medical equipment (such as wheelchairs), some prescription drugs (but not all), and other medical services not covered by Part A.
Part B costs vary depending on your income level, whether you have other insurance and the number of months you are covered. The cost of Part B depends on your income and the number of people in your household. If you have a high income, you may be required to pay more per month for Part B coverage.
Part C – Medicare Advantage Plans – The Medicare Advantage Plans are a type of health insurance offered by private companies. These plans are designed to cover the costs of Medicare Parts A and B. The premiums for these plans are usually higher than the traditional Medicare coverage, but they offer more benefits and services.
Part C covers hospital and skilled nursing facility stays for the lifetime of your policy. You might have to pay a deductible or copayment before you are eligible for coverage under Part A and B, but your premiums will be lower than if you had purchased a separate plan.
Part D – Prescription Drug Coverage – Part D is an optional Medicare prescription drug plan that helps cover your costs in retirement. The Medicare Part D prescription drug coverage costs are determined by the plan type, your income, and whether you are eligible for Extra Help. The premiums are deducted from your Social Security or Railroad Retirement benefits.
Medicare provides prescription drug coverage for everyone, regardless of income, health status, or prescription needs.
How & when do I sign up for Medicare?
If you are eligible to be enrolled in Medicare, the first step is to find out when your enrollment window opens. The Medicare Open Enrollment Period starts January 1st and ends March 31st every year. The Annual Enrollment Period (AEP) is when you can change your Medicare coverage choices and runs from October 15th to December 7th. New coverage choices made during that time will go into effect on January 1st.
One of the easiest ways to apply for Medicare is by filling out an application online.
- 1-800-772-1213 (TTY 1-800-325-0778)
- schedule an appointment at your local SSA
The Medicare enrollment process can be a complicated one. Let us help you simplify this process. To learn more about signing up for Medicare, call us at 1-800-432-3990 (toll-free) or (785) 291-4180 (local number). You’ll speak to a Blue Cross and Blue Shield representative who can help you understand your options.
As Kansans serving Kansans, we are committed to building lasting relationships with our members and will work to find a Medicare insurance plan that works for you. Contact us today to learn more about your options and allow us to help you get straight to enjoying the good life!
Blue Cross and Blue Shield of Kansas is not connected with or endorsed by the U.S. Government or the Federal Medicare Program. Blue Cross and Blue Shield of Kansas, Inc. serves all counties in Kansas, except Johnson and Wyandotte. Blue Cross and Blue Shield of Kansas is an independent licensee of the Blue Cross Blue Shield Association. For costs and details of coverage, including exclusions, reductions, or limitations and the terms under which the policy may be continued in force, call or write the company at 866-842-2469 (TTY 711) or Blue Cross and Blue Shield of Kansas, 1133 SW Topeka Blvd., Topeka, KS 66629. A Medicare Supplement Outline of Coverage is available at http://bcbsks.com/medicare.