Nearly half of all workers polled in a recent survey conducted by Robert Half say that they will delay retirement beyond the “traditional retirement age.” Survey respondents also identified health care insurance as one of their most valuable benefits. A recent Pew Research Center survey found that more than one-third of workers age 62 or older had already delayed their retirement plans due to the recession.
What does the plan to keep working do to Medicare eligibility? Even if you plan to continue working, the choice to enroll in or decline Medicare insurance shouldn’t be taken lightly. As the system is designed now, you become eligible to enroll in Medicare during an initial enrollment period that includes the 3 months before you turn 65, the month in which you turn 65 and the 3 months following your 65th birthday.
If you elect not to enroll in Medicare and later decide to join the plan, you’ll pay a penalty for delaying enrollment, and your Medicare premiums will be higher than they would have been had you enrolled during the special enrollment window. Your premiums will include the penalty for as long as you have Medicare coverage. The penalties for not enrolling increase the longer you wait. Further, you may have to wait to enroll in Medicare and you may experience coverage gaps while you wait for open enrollment.
The problem may be made worse if you’re covered by private insurance through your employer. Once you turn 65, your employer-paid insurance plan may expect Medicare to become your primary payer. If you don’t enroll in Medicare, your private insurance plan may refuse to pay for otherwise covered expenses as a primary payer.
If you plan to work past the age of 65 and have health insurance as a benefit of employment, talk to your benefits administrator to determine what coverage you’ll have once you become eligible for Medicare.