Should You Sign Up For Medicare If You Are Still Working?

When retirees turn 65, they typically sign up for Medicare unless they are covered by a federal or state government health care plan. However, if you are still working when you or a spouse turns 65, that becomes a bit trickier.

There are a few questions to consider first. First, check with your HR to see if you have “credible coverage for medical and drugs for Medicare purposes.” Typically, employers with less than 20 employees do not, and you will need to sign up for Medicare. Larger employers typically do have credible coverage, so you can wait until you retire to sign up for Medicare Part B.

Next, you should check whether you are on a high-deductible health plan with a Health Savings Account. If you are not, you should sign up for Part A regardless of whether you have credible coverage through work. This part of Medicare is free and may help reduce out-of-pocket health care costs. If you do have an HSA, you either need to stop HSA contributions or do not sign up for Medicare Part A. If you do sign up for Medicare Part A while making HSA contributions, it can result in tax penalties.  

Lastly, have you filed for Social Security benefits or will you in the near future? If so, then you should again stop HSA contributions if applicable and disenroll in Medicare Part B if needed. Typically, when you file for Social Security benefits, you are automatically enrolled in Medicare Part A and B unless you opt-out. Since Medicare Part B comes at a cost of at least $170/month, you should likely opt out of it since you already have credible healthcare coverage.  

Thank you for reading,

Alex

This blog post is not advice. Please read disclaimers.