One of the first steps to making the right Medicare decision is knowing when you should join Medicare.
Unfortunately, too many people get this wrong, and it ends up costing them a lot of money in penalties, and it creates a lot of unnecessary headaches.
One of the most frequent questions that we come across is, “I am currently covered under employee health insurance, do I need to join Medicare?”
Here is the simple answer.
The Medicare rule says:
By the time you turn 65, you either need to be on Medicare or covered under an acceptable health insurance plan, and if you aren’t, you will face penalties.
So for those of you who don’t have another form of health insurance past 65, this is straight forward for you. You need to join Medicare at 65.
However, it gets complex for those of you who plan to have employer health insurance after 65.
If this is you, let’s break down this rule the rule to determine if you need to join Medicare at 65.
According to this rule, you don’t need to join Medicare at 65 as long as you meet all three of these requirements:
1. Do you have health insurance through a current employer, a past employer, or a spouse’s employer?
If so, does that employer plan require you to join certain parts of Medicare when you turn 65? For example, many federal, state, veteran, and teacher retiree plans do require you join certain parts of Medicare.
Be sure to double-check the rules as they can change every year.
2. Does the employer providing you the health insurance have 20 employees or more? Or if you are disabled, do they have 100 or more?
If your employer does not meet this requirement, you must join Medicare at 65 to avoid penalties.
3. Is the prescription plan provided by your employer deemed “creditable”?
Creditable means that the plan, on average, covers prescriptions as well as or better than Medicare.
Your company benefit person can confirm this for you.
Now, if you meet all of these rules, you are likely not required to join Medicare at 65. However, it may still make sense to join Medicare anyway, to save you money, provide you access to different doctors, or even cheaper medications.
For example, just a few weeks ago, I was helping out Jane. Jane plans to work until she’s 68 but was paying more than average for her employer health insurance. So she was trying to decide is she better off staying on her employer plan or joining Medicare? Now based on our research, we found that she could save $13,000 in just the first year by leaving her employer plan and joining Medicare instead.
Depending on your situation, you need to decide which is best for you and to know which is best for you, your employer plan or Medicare, you need to compare the two side-by-side. You will want to compare:
- The premiums
- The deductibles
- The copays
- The max out-of-pocket
- How your prescription drugs are covered
- If you have family on your employer insurance, what are their costs if you join Medicare
Additionally, if you’re a business owner, there are things that you can do to save both yourself and your business money when going through this process.
With all of this said, my usual recommendation is that if you are paying more than $250 per month per person premiums on your employer plan and your employer plan max out-of-pocket is $2,000 or more, look to see if Medicare is cheaper.
Like I always say, Medicare is complicated, and too many people make the wrong Medicare decision, which is jeopardizing their healthcare and their savings. This is why people turn to The Medicare Coach.
To easily make your Medicare decision, you can join our Medicare Enrollment Concierge by CLICKING HERE.
