Whether you need to enroll in Medicare at age 65 if you continue to work and have health insurance through your employer depends on the number of employees there are. The same rules apply if your health insurance comes from your spouse’s employment. So, if you are still working at Lockheed Martin, when you turn age 65, you will fall into the first rule group below. If you are retired and your spouse is still working, then you must know how many employees are at his or her company to know which rule group applies to you.
20 or More Employees
If you have group health insurance from Lockheed Martin and are actively employed after you turn 65, you can delay enrolling in Medicare until the employment ends or the coverage stops (whichever happens first). You can do this without incurring any late penalties if you enroll later. When the employer coverage ends, you are to sign up for Medicare within a special enrollment period which can be up to eight months.
Note that “active employment” (yours or your spouse’s) is the key phrase. You cannot delay Medicare enrollment without penalty if your employer-sponsored coverage comes from retiree benefits or COBRA — by definition, these do not count as active employment.
Nor does it count if you work beyond age 65 but rely on retiree benefits from a former employer. You (or your spouse) must be actively working for the employer that currently provides your health insurance to delay Medicare enrollment and to later qualify for a special enrollment period.
The law requires a large employer — one with at least 20 employees — to offer you (and your spouse) the same benefits that it offers to younger employees (and their spouses). It is entirely your choice (not the employer’s) whether to:
- accept the employer health plan and delay Medicare enrollment
- decline the employer coverage and rely only on Medicare
- have the employer coverage and Medicare at the same time
If you enroll in both the group plan and Medicare Part B, be aware of the consequences. In this situation, the employer plan is always primary, meaning that it settles medical bills first and Medicare only pays for services that it covers that the employer plan does not. So, unless the employer coverage is very poor, you’d be paying monthly premiums for Medicare with little or no return.
Also, by signing up for Part B while you still have employer coverage, you could be forfeiting your right to buy Medicare supplemental insurance (known as Medigap) with full federal protections after this employment ends. Insurance companies are prohibited from refusing to sell you a Medigap policy or charge higher premiums based on your health or preexisting medical conditions, if you buy the policy within six months of enrolling in Part B. Outside of that six-month window, except in very limited circumstances, they can do both1.
20 or Fewer Employees
The laws that prohibit large insurers from requiring (or even persuading) Medicare-eligible employees to drop the employer plan and sign up for Medicare do not apply to companies and organizations that employ fewer than 20 people. In this situation, the employer decides.
If the employer does require you to enroll in Medicare, then Medicare automatically becomes primary, and the employer plan provides secondary coverage. In other words, Medicare settles your medical bills first, and the group plan only pays for services that it covers but Medicare doesn’t. Therefore, if you fail to sign up for Medicare when required, you will essentially be left with no coverage.
It’s therefore extremely important to ask the employer whether you are required to sign up for Medicare when you turn age 65 or receive Medicare based on disability. If so, find out exactly how the employer plan will fit in with Medicare. If not, ask for that decision in writing.
Note that in this situation, signing up for Medicare Part B when you also have employer insurance will not jeopardize your chances of buying Medigap supplemental insurance after the employment ends. When Medicare is primary to the employer plan, you have the right to buy Medigap with full federal protections if you do so within 63 days of the employer coverage ending1.
When you are to purchase Medicare, what it will cost and how it will fit in your retirement budget are questions that can be discussed with your financial advisor. If you don’t have one, we do! We have Lockheed Martin specialists who are well-educated in your benefits and in the art of financial planning. Click here or call 817-210-3444 to schedule a complimentary consultation today.
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