Should I Get Part B If I’m Working Past 65?

Published by: Medicare Made Clear

If you’re planning to work past 65, or plan to remain on your spouse’s employer plan, you may be considering whether or not you should still enroll in Medicare. You will still have an Initial Enrollment Period when you turn 65, but depending on the health coverage you currently have, you may also be able to delay enrollment.

Many people turning 65 who have employer coverage through an employer or spouse often choose to still enroll in Medicare Part A at 65 as it’s usually premium-free, so we won’t focus on that in this blog. It is important to note, however, that enrolling in Part A impacts your health savings account (HSA) if you have one. Watch the video below to learn how Medicare and HSAs work.

Video transcript

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ON SCREEN TEXT: Medicare Conversations
Working past 65

On SCREEN TEXT: What happens to your HSA with Medicare?

I'm Phil Moeller. Thanks for spending a few minutes with me today.

If you have a high deductible plan, many employers will help you set up a health savings account to help you deal with those expenses in the deductible phase of your plan.

HSAs are funded with pre-tax dollars. Usually, your employer puts in some, and you can put in the rest up to a specified annual limit that is set and changed every year by the IRS.

Not only can you fund it with pre-tax dollars, but you can spend those dollars on any qualified health expense, and you will not incur a taxable event when you spend the money.

So, HSAs can be a great vehicle because they're rare in that they're funded with pre-tax dollars. But when you spend the money out of the account, it's not a taxable event.

So, it's tax-free going in, tax-free going out. It can be a great tool. And the other nice thing about HSAs is that if you have unspent monies in an HSA, you can carry them over from year to year.

So, you could build up some pretty big balances in an HSA. And I've actually advised people in some settings to not use their HSA. Just use it as almost a retirement vehicle.

Build up big balances in an HSA so when you do retire, you can spend those balances tax-free on any qualified expense, including, by the way, Medicare premiums, which are a qualified medical expense when you retire.

So, HSAs can be terrific. However, there's a wrinkle in that HSAs are not compatible with Medicare.

So, if you have Medicare, you are no longer allowed to contribute to an HSA. You can use the funds in the account, but you can't contribute new funds to the account.

And your response may be, "Well, that's fine because I'm gonna continue to work, and I'm gonna continue to use my HSA, and I'm not filing for Medicare." However, a lot of people, as they get older, especially when they reach the latest claiming age of 70 for Social Security, it really behooves them to file for Social Security.

When you file for Social Security, by law, you must receive Part A of Medicare. You can't avoid it. If you wanna get social Social Security, you have to be enrolled in Part A. If you're enrolled in Part A, it means you can't continue making contributions to an HSA. People rarely understand this.

I get a lot of questions from people who simply are surprised when they run into this roadblock. And so I'm telling you today that there is a roadblock you should be concerned about.

So, you shouldn't unintentionally enroll in Part A, and in some cases, it can influence the timing of when you do apply for Social Security.

However, I don't know of any situation when you're better off not taking Social Security benefits and using the benefits of contributing to an HSA.

Especially if you're waiting until age 70 to file, you should just file for Social Security and understand that that means you won't be able to continue contributing to HSA.

I hope I've helped answer some of your Medicare questions. I realize you may have lots of other questions. Medicare can be pretty complicated.

MedicareMadeClear.com provides lots of answers to your basic questions. So if you still have them, I urge you to go there and see if you can get the answers you need. Thanks again for spending time with me today.

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Part B is different. Unlike Part A, Medicare Part B has a monthly premium, which can cost $170.10 to $578.30 depending on income. It has a late enrollment penalty for anybody who enrolls without qualifying for a Special Enrollment Period. That penalty is an additional 10 percent of the Part B premium for each 12-month period you delay enrollment. Learn more about this and other late enrollment penalties.

Now, let’s look more closely at enrolling in Medicare Part B when working past 65.

When You Must Enroll in Medicare Part B

You may be required to get Medicare Part B even when you’re still working. There are two situations in which you must get Part B when you turn 65.

If your employer has fewer than 20 employees.

If you’re covered by a spouse’s employer, and the employer requires covered dependents to enroll in Medicare when they turn 65.

If you’re not married but living in a domestic partnership and are covered by your partner’s employer health insurance.

In each of the above cases, you won’t qualify for a Special Enrollment Period and cannot delay enrolling without incurring late enrollment penalties.

Additionally, some employer plans will automatically become secondary to Medicare when you become eligible. In this case, Medicare becomes your primary insurance and would pay first. If you do not have Medicare and need health care, you would essentially have almost no coverage from your employer plan. One such plan that operates like this is the military’s TriCare for Life.

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When You Should Consider Enrolling in Medicare Part B

If you qualify to delay enrolling in Medicare, deciding to do so is a personal choice.

Some may choose to delay, and for others, it may still be a good fit for your health and lifestyle to enroll in Part B. Consider the following when trying to decide whether to enroll in Part B or delay while still working:

Is Medicare less expensive than your current health insurance?
Does Medicare offer better coverage than your current health insurance?
Do you want to keep your current insurance but also take advantage of Medicare benefits
Do you want to enroll in either a Medigap or Medicare Advantage plan?
Is your prescription drug coverage considered “creditable” by Medicare?

Answering the above questions can help you decide whether or not to delay enrollment. It’s important to carefully consider the last item regarding prescription drug coverage. While most employer coverage is considered creditable, you should still verify if it is or could end up facing a late enrollment penalty for Medicare Part D.

I Want to Delay Part B

If you qualify and decide you want to delay enrolling in Medicare Part B, you should not face any late enrollment penalties for Part B. When you lose your employer coverage, you will get an 8-month Special Enrollment Period during which to enroll in Medicare Part B, and Part A if you haven’t done so already.

You’ll also be able to enroll in a Medicare Advantage (Part C) plan or Part D prescription drug plan in the first two months of this period. Note: if you enroll in Part C or Part D after the first two months of your Special Enrollment Period, you may face late enrollment penalties for Part D. You’ll want to also ensure you provide proof of creditable coverage when you enroll in Part D.

You do not need to notify Medicare that you will be delaying Part B unless you are already receiving Social Security or Railroad Retirement Board benefits.

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