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Comparing employer coverage to Medicare: What’s the better option?


Whether you’re planning for retirement or confidently continuing to work past age 65, Medicare is a health coverage option for you. People often call our advisors to ask, “What’s better, my employer group coverage or a Medicare plan?”

There’s no right or wrong answer—the best plan is the one that works for your needs, budget, and lifestyle. Our advisors are here to research and compare all your plan options so that you can find the right fit. As you compare employer coverage to Medicare, here are a few factors to keep in mind.

Working Past 65 Checklist

Retirement isn’t a requirement for Medicare.

Many people think that Medicare is only for retirees, but this isn’t true! You can enroll in Medicare while continuing your career. Your working status does not impact your eligibility for Medicare.

If you sign up for Medicare while you’re still working, it may make your eventual retirement that much smoother because you won’t have to change your health insurance when the time comes.

Medicare offers more options than employer coverage.

When you enrolled in your health care coverage through your employer, you likely chose from less than a handful of available plans. By comparison, in most states, Medicare offers hundreds of plan options. For some individuals, this can make the transition from employer coverage to Medicare feel overwhelming.

But Medicare’s multitude of options can work in your favor, despite how mind-boggling it may seem to choose one plan out of hundreds. With more selection, enrolling in Medicare gives you an opportunity to find a health care plan better tailored to your specific needs. Switching from employer coverage allows you to shed the one-size-fits-all insurance model.

Many Medicare plans are offered by the same insurance carriers that provide employer coverage, as well. If you enjoy the customer service you get from your current insurance carrier, you may be able to continue with them on Medicare.

Working Past 65 Checklist

Your costs will change.

Switching your health coverage means that some of your costs will change. This is unique for every plan, but generally speaking, Medicare tends to provide more benefits than employer coverage at a lower cost.

If you have a high-premium or high-deductible plan through your employer (or your spouse’s employer), switching to Medicare may be more cost-effective. Many Medicare plans offer first dollar coverage, meaning you can pay little or nothing out of pocket for health care visits. Depending on the plan, Medicare offers $0 premiums and low to $0 deductibles.

Keep in mind that some parts of Medicare (Part B and Part D premiums) can be adjusted based on income, but this only applies to a small handful of individuals. Additionally, you cannot add dependents to Medicare coverage. You may need to make accommodations for your spouse’s insurance. Our local advisors will consider all these factors as we assess the right Medicare plan for your needs. We also offer individual health insurance plan options for your spouse to consider.

Some benefits may carry over.

To smoothen the transition from employer coverage to Medicare, some benefits of your current plan may remain after you switch. One example is your health savings account (HSA). You can use your existing HSA funds to pay for qualified Medicare expenses.

It’s important to note that if you apply for Medicare before your 65th birthday month, you can continue to contribute to your HSA through your employer until the day prior to your Medicare effective date. However, if you sign up for Medicare after turning 65, your Medicare Part A coverage will be retroactive for up to six months. In this case, you should plan to stop contributing to your HSA up to six months prior to signing up for Medicare because you could face penalties if you continue to contribute. Keep in mind that your annual HSA contribution limit will be prorated by the number of months you are eligible – the number of months you do not have Medicare Part A or Part B in that calendar year.

Smaller companies require you to enroll.

If you work for an organization with fewer than 20 employees, you are required to enroll in Medicare once you’re eligible. Otherwise, you could face penalties later. These could stick with you, increasing your costs for life.

However, if you work for an organization with more than 20 employees, you have the option to defer (or delay) Medicare Part B and Part D. Our advisors can help you take the proper steps to do this. Reach out to us to avoid late enrollment penalties and to ensure your drug coverage is creditable to Medicare.

Get local answers to health insurance questions.

As you prepare to transition from employer coverage to Medicare, let RetireMed do the research for you. We can compare your employer plan to Medicare, making it easy to find the right coverage for your needs. Additionally, we can provide individual health insurance plan options if you have a spouse who’s not yet eligible for Medicare.

With advisors in Dayton and Cincinnati, we’re a nearby resource for local answers to health insurance questions. 

Call: 937.915.3563

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