How Medicare Works if You’re Not Retired

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If you’re not planning to retire anytime soon but you’re about to turn 65, you might be wondering if you should sign up for Medicare. Everyone’s circumstances are different, but in general, the decision to enroll will depend on the size of your employer and the value you’re getting from your workplace health insurance.

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Signing Up for Medicare Part A at 65 If You’re Still Working

If you’re still working at age 65 and not claiming Social Security benefits, the government will not automatically enroll you in Medicare Part A, which covers hospital stays.

If you work for a company with 20 or more employees and you’re enrolled in your employer’s health insurance plan, you do not have to enroll in Part A. If your employer covers the bulk of your premiums, you have a low deductible, and you’re not eligible for premium-free Part A, it might make sense to continue relying solely on your workplace coverage.

If you’re eligible for premium-free Part A—most people are because they’ve paid Medicare taxes throughout their working years—you might as well enroll since you’ve earned it. As secondary health insurance, Part A may cover hospital expenses your employer’s plan does not.

If you work for a company with fewer than 20 employees, you should enroll in Part A as soon as you’re eligible. Medicare will become your primary payer.

If you’re covered by a Health Insurance Marketplace plan or COBRA, you should sign up for Medicare Part A during your initial enrollment period, which starts three months before you turn 65, includes your birthday month, and ends three months after you turn 65.

Although Medicare Part A pays for inpatient hospital stays and nursing care, there’s an annual deductible, which is $1,484 for 2021 and $1,556 for 2022. Many people don’t pay a monthly premium for Part A, and there are no coinsurance costs for hospital stays of 60 days or less.

Please note that Part A premium penalties apply if you are not eligible for premium-free Part A and you don’t enroll when you’re first eligible.

Signing Up for Medicare Part B at 65 If You’re Still Working

If you’re still working at age 65 and you’re not claiming Social Security benefits, the government will not automatically enroll you in Medicare Part B, which covers doctor’s visits, diagnostic tests, medical equipment, ambulance transportation, and mental health care.

If you work for a company with 20 or more employees and you’re enrolled in your employer’s health insurance plan, you don’t have to enroll in Part B. You also might not want to because it isn’t free.

Medicare Part B Premiums and Deductibles

In 2021, the Medicare Part B monthly premium is $148.50 if you earn up to $88,000 as a single income tax filer or $176,000 as a married filer.

The Part B deductible is $203 for 2021. Please note that premiums increase in tiers at higher income levels.

For 2022, the Part B monthly premium is $170.10 if you earn up to $91,000 as a single income tax filer or $182,000 as a married filer. The 2022 deductible is $233 for the year.

Group Coverage

It’s important to ensure that your workplace health insurance meets the IRS definition of group coverage. You’ll want to get the answer in writing from your employer. If it doesn’t, you should enroll in Part B to avoid paying the premium penalty that’s imposed if you don’t enroll in Part B within eight months of becoming eligible for it.

If you work for a company with fewer than 20 employees, you should enroll in Part B as soon as you’re eligible. Medicare will become your primary payer.

If you already have Part B but don’t need it because you have group coverage, you can contact Social Security to unenroll. Keep your proof of group coverage in case you later need to prove you don’t owe a penalty.

If you’re covered by a marketplace plan, a private plan, or COBRA, you should sign up for Medicare Part B during your initial enrollment period to avoid penalties.

Signing Up for Medicare Part D at 65 If You’re Still Working

To make sure you have prescription medication coverage, you need either creditable prescription drug coverage from work, Medicare Part D, or a Medicare Advantage plan with drug coverage. Your employer can tell you if your workplace coverage is creditable, meaning it’s as good as or better than Part D.

Once you sign up for Part D, you could lose your workplace prescription coverage, and you may not be able to get it back.

If you don’t have either and you don’t enroll in Part D on time, you’ll pay higher Part D premiums.

The Bottom Line

You won’t be automatically enrolled in Medicare at age 65 unless you’re claiming Social Security benefits. But if you’re not retired yet, you may not be claiming those benefits, and you’ll need to proactively choose which parts of Medicare to enroll in and when.

Since Part A is free for most people who have paid Medicare taxes throughout their working years, it usually makes sense to enroll even if you have great health insurance through work. The decision to enroll in Parts B and D is less straightforward, and you’ll need to know if your workplace insurance meets certain requirements before you proceed.