Working past 65: Helping Medicare-eligible employees navigate health care coverage

As more and more employees opt to work past the age of 65, employers may find themselves increasingly fielding questions about Medicare coverage from eligible workers.

More than half of employees who continue to work after age 65 said having access to their employer’s health care benefit is a significant reason, according to a survey by Medicare advisory firm Allsup. In addition, the survey found about four in 10 employees working past age 65 don’t fully understand their Medicare options.

The Disability Management Employer Coalition (DMEC) recently hosted a webinar, sponsored by Allsup, titled “Understanding the healthcare perspective of Medicare aged workers” to address some of the common questions benefits professionals might encounter from employees approaching retirement age.

“Employer benefits and HR representatives are often tasked with being the expert for not only the plan they offer but also inquiries and perhaps confusion about Medicare,” said Robert Sokol, director of business development, Healthcare Insurance Services, at Allsup. “Medicare-eligible employees’ perception can be summed up as follows: health care is a motivating factor to stay in the workforce, many did not know they could receive Medicare while still working, there is a lack of understanding of Medicare, its various options and how it compares to an employer-sponsored health plan, and Medicare-eligible employees desire expert assistance to better understand Medicare.”

When people approach age 65, they receive information about enrolling in Medicare from the government. This often prompts them to seek the help of their employer to decipher the often-complex process, said Bethany Cissell, an account executive with Allsup Healthcare Insurance Services.

Allsup’s survey revealed that 54% of employees approaching age 65 will likely seek guidance about Medicare from their employer’s HR benefits manager. The majority of respondents also indicated they would welcome the advice of a Medicare counselor or an employer-sponsored service that compares health insurance options including Medicare during an open enrollment period.

One of the most common questions employers are likely to encounter about Medicare is when employees can enroll. There are three main Medicare enrollment periods:

1. The initial enrollment period occurs when an individual is first eligible for Medicare when they turn 65 and lasts for seven months – three months before their birthday, the month of their birthday and three months after their birthday. If they are currently working, they do not have to enroll, but if they do, Medicare is a secondary payer to the employer group plan.
2. A special enrollment period is available when an individual loses credible group health coverage. This enrollment period is commonly used by those who remain in the workforce and are covered under their employer’s group health plan until they retire after age 65. This enrollment period lasts eight months from the time health coverage ends and allows them to sign up for Medicare Part A and Part B. Individuals may incur a penalty if they don’t enroll in a Part D drug plan at the time they first enroll in Medicare.
3. Finally, there is a general enrollment period that runs from January 1 through March 31 every year.

Related: Medicare open enrollment is here: Key drug coverage changes in 2024

Medicare-eligible employees often have questions about the various paths of Medicare, said Cissell.

Original Medicare – Medicare Part A, primarily covers hospital and inpatient services, and Medicare Part B broadly covers outpatient services and preventive care. Medicare A and B do not cover medications, so individuals generally need a standalone Part D drug plan.

In addition, enrollees can opt for a supplemental Medigap plan to make up the difference in what is not covered under traditional Medicare, said Cissell. There are 20 lettered Medigap policies to choose from that provide a range of covered services and several price points. Medigap policies are available with guaranteed issue rights, meaning they cannot ask medical questions or deny coverage for those who sign up within 6 months of enrolling in Medicare Part B.

A separate Medicare path, Part C or Medicare Advantage, is a bundled plan that covers the same services that Medicare Part A and Part B cover under one premium. The plan functions much like an employer-sponsored group health plan with copays and coinsurance and can include extras such as vision benefits, dental benefits and fitness programs.

For eligible employees, Medicare can be an attractive addition or alternative to an employer-based plan, the panelists said. While Medicare premiums fluctuate, they don’t usually change as dramatically as they do in employer-sponsored plans, and deductibles and out-of-pocket costs can often be lower than with group plans.

While nearly all workers aged 65 and up are aware they qualify for Medicare, the main reason they choose not to enroll is because they are concerned their coverage will not be as good as their employer’s group plan. However, Sokol and Cissell noted that although premiums associated may make Medicare appear less attractive on the surface, a personal review of the person’s medical usage could reveal an opportunity to save money even when paying a higher premium.

“Seniors living and working today are more likely managing several chronic conditions – arthritis, heart disease, cancer, respiratory disease, diabetes,” said Sokol. “Post-65 active workers can easily represent a high-cost population to your health plan. Medicare may offer an opportunity to bring options other than your group health plan to those post-65 active workers.”