Your 65-Year-Old Client Is Still Working. Do They Need to Enroll in Medicare?
What You Need to Know
If your client is covered by an employer health insurance plan at age 65, the size of the employer is key in determining whether they need to enroll in Medicare.
HSA contributions are not allowed once your client is enrolled in Medicare.
There are specific Medicare enrollment periods that must be adhered to, depending on your client’s situation.
As your clients approach age 65, you undoubtedly get a number of questions about enrolling in Medicare. Many of these questions are about how to go about it, deadlines for enrolling and whether they should consider a Medicare Advantage plan or similar supplemental plan.
For clients who are working at age 65, there are a number of additional issues and questions to consider.
Basic Medicare Rules
If your client is not receiving Social Security benefits when they reach age 65, they will not automatically be enrolled in Medicare. They will need to make a decision as to enroll now or wait.
Whether your client needs to enroll at age 65 will depend upon the nature of your client’s medical coverage, including coverage through a spouse’s employer. If your client is required to enroll and they don’t do so in a timely fashion, there could be penalties involved, some of which are permanent.
The normal enrollment period if required to enroll at age 65 is seven months, beginning with the three-month period prior to the month in which your client turns 65; the month of their birthday; and the three months following.
If your client is already collecting income from Social Security, they will automatically be enrolled in a Part A plan.
Employers With 20 or More Employees
If your client is covered by health insurance through a company with 20 or more employees, they are not required to enroll in Medicare. The same rules apply if your client is covered under a plan offered by their spouse’s employer.
Whether your client decides to enroll in Medicare is up to them, not the employer. The rules require that an employer with 20 or more employees offer the employee or their eligible spouse the same coverage offered to all other employees.
Your client can decide between these options:
Stay with the employer coverage and delay Medicare enrollment
Opt out of the employer coverage and go solely with Medicare
Continue the employer coverage and enroll in Medicare as well
In some cases, people might consider signing up for Part A (assuming they have met all eligibility requirements), as it is free. In this case, the client’s employer coverage will be primary and Medicare Part A secondary. A client still making pretax contributions to a health savings account (HSA) may opt not to sign up for Part A. More on this below.
In the case of Part B, clients can also enroll if still covered by an employer plan, but again, the employer coverage will be primary if the employer has 20 or more employees. Additionally, Part B requires the payment of a premium.
Taking Part B while covered by an employer policy might hinder your client’s ability to purchase a Medigap supplemental policy once they leave their employer and Medicare becomes their primary coverage. Insurers cannot deny Medigap coverage to anyone on Part B regardless of their health if they sign up for a policy within six months of enrolling in Part B.
Having employer coverage while on Part B does not extend this six-month window.
Upon losing coverage from this employer, your Medicare-eligible client will have an eight-month special enrollment period to sign up without incurring any penalties.
