Are you 65 and still working?You’re not alone. Today, Americans 65 and older are estimated to be the fastest growing group of workers through 2024.
This wasn’t always the case. In fact, in the past, working after age 65 would have been unthinkable. Most people retired by age 62, and some were even retired in their 50s.
But, many seniors are now seeing the benefits of working longer. Some experts even say drawing Social Security benefits later can provide substantial financial benefits for when you enter your 70s.
Waiting to retire, however, does present some challenges. Working out the logistics of when to enroll for Medicare insurance may be one of them. This is especially true if you’re still covered under your employer’s health insurance.
Like any decision regarding health plans, price is a major factor. Here’s what you need to know about the costs associated with Medicare insurance and how those costs are affected if you are still employed.
Basic Costs Of Medicare
For those who decide to enroll in Medicare when eligible at 65 - whether employed or retired - the U.S. government site for Medicare outlines the basic costs for 2019. Be sure to check each year, as costs can change.
How much a citizen typically pays for parts of Medicare is determined by factors, such as how long you or your spouse paid Medicare taxes, income and plan choice.
Part A Premium
Most people don’t pay a monthly fee for Part A. If you worked and paid Medicare taxes for several years, you’ll likely fall into this category.
If you did not pay Medicare taxes or paid them for fewer than 30 quarters, purchasing Part A will cost up to $437 per month. If you worked and paid for 30 to 39 quarters, the premium cost is $240 per month.
There are also costs associated with a deductible and coinsurance that Medicare enrollees should know:
The deductible for each benefit period is $1,364.
From days 1 through 60 of being admitted to the hospital, there is no coinsurance for each benefit period.
On the 61st day of a hospital stay, through day 90, you would pay a $341 coinsurance per day of each benefit period.
On days 91 and beyond, there is a $682 coinsurance per day. These are known as “lifetime reserve days.” After 60 days over your lifetime, you incur all costs.
Medicare Part A helps cover medical services that are typically higher in costs and are inpatient related. This includes inpatient care at a hospital, skilled nursing facility care, hospice, surgery, home health care and surgery.
Part B Premium
The cost for the standard Medicare Part B premium is $135.50 per month. This cost may be higher, however, depending on income. Part B covers various outpatient medical services as well as preventative care, such as mammograms and flu shots.
The Part B deductible is $185 per year. After the deductible is met, you pay 20 percent of the amount Medicare approves for doctor services, outpatient therapy and durable medical equipment.
Read more about how Medicare works in our article, What Is Medicare - Parts A And B.
Part C and D Premiums
The cost for Part C and D premiums vary by plan. Part C is a Medicare Advantage plan. This allows private insurance companies to provide the same benefits as the original Medicare.
However, rather than pay deductibles and coinsurance like you do with Part A and B, you instead pay copays. To provide Part C, insurance companies must be approved by Medicare. Monthly premium prices can range anywhere from $0 to $300, depending on the plan.
Part D provides outpatient prescription drug coverage. This is provided through private insurance companies as well. These insurance companies have contracts through the government, with each plan that is offered covering a different set of prescription drugs.
In 2018, the average monthly premium for Part D was $34. However, the plan you choose and where you live can affect this cost.
Weighing Cost Options
Now that you know the approximate costs of Medicare coverage, you’re faced with assessing whether the cost of Medicare insurance is better or more costly for your budget if you’re still employed and covered under employer-provided insurance.
You can enroll in Medicare three months before turning 65. When deciding whether to enroll in Medicare or stay enrolled in an employer health insurance plan, you’ll want to consider:
How long you have worked and paid Medicare taxes
How your monthly premium now compares to any monthly premiums you would pay under Medicare (Employers typically pay 50% or more of their employee premiums)
How your current deductibles and co-insurances compare to what they would be under Medicare
Whether your current physicians accept Medicare, and if not, what that would mean for any costs you would incur
The Cost Of Dual Coverage
Even though you may be eligible to enroll in Medicare, it may make sense to delay enrolling until you retire and are no longer under your employer’s health insurance plan. Special enrollment periods allow you to delay enrollment in all four parts of Medicare without incurring fines if you have employer healthcare coverage.
However, it also may make sense to enroll in one or more of the parts, even when you’re covered under employer insurance. For example, for most, Part A is free. The monthly premium for Part B, on the other hand, could be $135 or higher, making this not worth the cost if your insurance already provides the coverage you need.
It’s also important to remember if you work for an employer with more than 20 employees, your insurance likely would be the primary payer when you incur any health care costs. Medicare would be the secondary payer. This means Medicare would only pay medical costs if your employer health insurance doesn’t pay as much as what Medicare would pay if it were the primary payer.
Knowing when to enroll in Medicare and understanding any associated costs can be complicated if you are still employed and under your company’s insurance. It’s important to discuss your options with your employer and with a licensed insurance expert to determine what makes sense for your situation.
A licensed agent will advocate for you and guide you through understanding how Medicare works, and which options would best fit your lifestyle and needs.
“Statements on this website as to policies and coverage's and other content provide general information only and we provide no warranty as to their accuracy. Clients should consult with their licensed agent as to how these coverage's pertain to their individual situation. Any hypertext links to other sites or vendors are provided as a convenience only. We have no control over those sites or vendors and cannot, therefore, endorse nor guarantee the accuracy of any information provided by those sites or the services provided by those vendors.”