Employer Coverage vs Medicare

Deciding to stay on your employers plan or going on Medicare with private insurance can be a difficult decision. There are many factors to consider. In this article I will address many variables that surround this topic by giving several specific scenarios. These scenarios are based on actual experience over the past 25 years of helping people make an informed decision. So let’s get right to it.

Scenario #1: 64 year old individual turning 65 in the next 3 months covered by employer insurance. Employer has more than 20 employees. Individual is going to continue to work after 65th birthday and will retire at a future date.

Solution: This person should sign up for only Medicare Part A (hospital). The employer plan will be primary and Medicare Part A will pay secondary to hospital expenses.

Reason: Medicare Part A is a “paid up” benefit through tax dollars accrued by working a minimum of 40 quarters (10 years). Medicare Part B (medical) requires a premium payment. Since Medical coverage is provided by your employer, you can take advantage and delay your enrollment in Medicare Part B until you fully retire.

Scenario # 2: Individual is turning 65 in the next three months and covered under spouse’s employer plan. Spouse is still working for company that has more than 20 employees and won’t retire for several years.

Solution: In this situation it is important to get the summary of benefits from the employer and talk to a trusted independent licensed insurance agent that specializes in Medicare. The licensed agent can help you compare the premiums and benefits of the employer plan vs full Medicare. After comparing, choose the plan that offers the most value.

Reason: If a person does not compare the benefits and costs of staying on their employer plan vs going on full Medicare, they may end up paying more for less coverage, by staying on their employer plan, or giving up valuable benefits that they can’t get back if they leave their employer plan. It really all depends on the benefits and costs of the employer sponsored plan. I have found some employer plans offer excellent coverage with low deductibles and the exact opposite.

Senario #3: Individual is covered under employer plan, not married and is retiring at 65 or later. Employer offers insurance as a supplement to Medicare.

Solution: This situation has the same solution as scenario # 2. Make sure the employer retiree plan offers as much or more benefits than a private health plan with comparable premiums. Having a trusted agent can really help in comparing benefits.

Reason: Do not assume the employer retiree plan is going to be better. Take the time to look at the options from private plans to be sure.

Scenario #4: Individual is turning 65 or older, married and wants to retire. Employee and spouse (under 65)are covered by employer plan but employer coverage ends after employee retires.

Solution: The retiree will sign up for Medicare Part A and Part B, get a Medicare supplement and stand-alone Part D drug plan or join a Medicare Part C advantage plan. Please talk to an independent licensed agent and have the differences explained. The underaged spouse will go to the healthcare marketplace and sign up for an individual plan until Medicare eligible.

Reason: The underaged spouse cannot stay on the spouses coverage when they retire. I have seen where people will continue to work so the spouse can have health coverage at a more affordable rate. The marketplace plans adjust premium according to income. Go the marketplace website and find out what the premiums will be to make sure you can afford to retire.

Scenario #5: Individual is turning 65 or older, married and is retiring. Employee spouse is over 65 and covered by spouses employee plan as primary and has only Medicare Part A.

Solution: Retiring spouse will sign up on Medicare Part A and B unless already signed up on Medicare Part A. Spouse will sign up on Medicare Part B. If the company offers coverage after retirement, they can compare with private insurance and see the most value is offered. If the employer plan ends, they will get a Medicare plan from private insurance to supplement their Medicare.

Reason: Medicare becomes the primary payor after a person retires.

While there are 5 examples given above there are other possible situations that may arise. This information is accurate to the best of my knowledge as of 2/1/2021.

Please use this link to Medicare’s website  that will give you information on employer coverage.


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