Medicare Series Part Three: Working Beyond Age 65 – Medicare or Employer Coverage?

An increasing number of Americans are working well into their 70s and even their 80s. Enjoying a few more years of employment and income (or delaying retirement, depending on your viewpoint) has a number of benefits, but also presents workers and spouses with a key question.

What happens if you or your spouse are still working or have employer-provided group health coverage at age 65? 

The multi-part answer depends on what the group plan allows and your preferences. 

Go Ahead and Enroll in Medicare Part A

Even if you have employer health insurance, it’s generally a good idea to enroll in Medicare Part A. This part covers hospital room and board, hospice, and limited skilled nursing and home health care. 

Why have Part A in addition to employer coverage? You’ll pay $0 for this additional layer of health insurance as long as you earned income from jobs in which you paid FICA taxes for at least 10 years. 

You should enroll in Part A during the three months before your 65th birthday so that coverage begins on the first day of your birthday month. 

You’ve Got Choices When It Comes to Medicare Part B

As for insurance covering doctors’ services and outpatient care, you need to choose whether you want your (or your spouse’s) employer group plan only, Medicare Part B only, or both. 

Let’s consider the situation of Mary and Bill. Mary is a vice president for an international bank. She’s 62 and plans to continue working until at least age 68. Her husband, Bill, is 64 and retired from his career as a grocery store district manager last year.  Both Mary and Bill are covered by Mary’s employer group plan. 

First, they need to find out if Mary’s group plan requires Part B enrollment, and if so, whether Medicare will be the primary or secondary insurance. If the employer plan is the secondary insurance, Bill may be required to enroll in Part B before the provider pays. 

If Bill can remain on Mary’s insurance, they then need to decide whether to replace or supplement the group plan with Part B, and whether to purchase other Medicare coverage (Part D and Medigap, or Medicare Advantage).

Option 1: Employer Coverage + Part B

Mary’s HR department verified Bill can remain on her group plan and is NOT required to enroll in Part B. Mary’s employer has 20 or more employees, so the group plan will be Bill’s primary insurance, and Medicare will be his secondary.

Tip: If Bill had group coverage through his former employer, Medicare would be the primary insurance and the group retiree plan would be secondary.

Bill has enjoyed relatively good health his entire life but his family has a long history of heart disease and high blood pressure. He and Mary want the peace of mind that comes from Bill remaining on Mary’s plan AND also having additional coverage for doctors’ services and outpatient care.

They choose Part B instead of Medicare Advantage (Part C) primarily because they travel out of state regularly. Bill will be automatically enrolled in Part B when he enrolls in Part A. 

Mary’s group plan covers all of Bill’s prescription drugs, so he won’t be enrolling in optional Part D.

They will consider adding Medigap in the future when Mary’s group coverage ends. For now, though, Bill is well covered by the group plan and Medicare Parts A and B. 

Tip: If Bill had wanted Part D, Medigap, or Medicaid Advantage, he would need to enroll at the same time as Parts A and B in order to avoid late enrollment penalties

Option 2: Employer Plan Only

Mary and Bill decide the group plan provides sufficient enough coverage for Bill’s doctors’ services, outpatient care, and prescription drugs. 

Plus, the group plan premiums are much lower than Medicare premiums. They are trying to maximize savings and minimize living expenses as Mary approaches retirement. 

If they change their minds before Mary retires, Bill can enroll in Parts B, D, or Medigap any time. 

Option 3: Medicare Parts B & D or Medicare Advantage Only

The benefits of Mary’s employer plan and Medicare are generally comparable but Bill regularly receives care from two specialty doctors who are out-of-network in Mary’s plan. These doctors are also out-of-network in the Medicare Advantage plans available in their area. 

Both doctors accept Medicare, so Bill decides to enroll in Parts B and D, plus a Medigap plan to reduce out-of-pocket costs. 


  • If you decline Part B and then extend employer coverage in the months following your retirement via COBRA, you should still enroll in Part B (and other Medicare parts) during your Special Enrollment Period. Otherwise, you’ll pay a lifetime late enrollment penalty in the form of increased Medicare premium amounts for the rest of your life.
  • Domestic partners covered by employer plans should enroll in Parts A and B in the three months before your 65th birthday because you will not qualify for a Special Enrollment Period when your partner stops working.

Health insurance plays a key role in financial stability and retirement, so carefully weigh your options before enrolling or not enrolling in Medicare. Keep in mind what’s best for one couple may not be the best option your situation. 

Wondering how your health coverage options will impact your finances and retirement plan? Contact the Arnold and Mote Wealth Management team for guidance!

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