Let’s assume you are approaching at 65 and, like the rest of America, confused about your Medicare choices. Your spouse wants to continue working for five more years. He will delay taking Medicare Part B because he can remain on his health plan at work.
For more people, their research stops here. Once they learn that they are not required to sign up for Medicare Part B as long as they have a group health plan that is as good or better than Medicare, they accept that they don’t have to do anything. Your husband might be better off on Medicare.
To determine the best route, you should do a bit more leg work. Just because you can stay on your employer’s group health plan doesn’t mean that it is the best option for you. Your employer likely pays a portion of your health insurance. Gone are the days when your insurance was paid 100 percent by your employer. In most instances, employers are not paying any part of the costs for your spouse.
At 65, even if you want to continue to work, Medicare may be a better option. The only way to tell which plan – your employer plan or Medicare – gives you the best benefits at the lowest price is to do a cost comparison. Don’t assume your work plan is better. Often it is not.
To compare plans, you’ll have to find out exactly how much you contribute each month for your work health plan. How much does it cost to keep your spouse on past age 65? You’ll be shocked that it is often very high. How high is your annual deductible? The Kaiser Family Foundation found that in 2021, the average deductible for a single worker was $1,655. If you compare that with a Medicare Supplement Plan G with a deductible of $233, you can see that Medicare could be a better choice.
Does your work plan have any extra benefits like a great dental program? A Medicare Supplement won’t have any dental benefits.
A huge variable is how much you will have to pay for Medicare Part B. The rich pay more. While 90 percent of people are paying $170.10 each month, you could be paying from $238 up to $578 per month. If you do fall into this higher-earner category, it is almost always advantageous for you to stay on your work health plan and delay Medicare until you stop working. That same advice goes for your retired spouse. If she is 65 and stops working, she could go onto Medicare, but if you file your taxes jointly, she’ll be subject to the higher monthly Part B amounts, too. This will almost always make staying on group health the best option.
You can’t do the calculation once and be done. Your work health insurance will go up each year. The benefits change as employers run from inflation. You’ll have to redo this comparison each year.
Many people are not sure that they can decline Medicare Part B if they continue to work past age 65. The rule is you won’t have a late Medicare penalty or be hurt in any way by declining Medicare Part B – as long as you work for a large employer (over 20 employees) that offers a health plan that is as good or better than Medicare.
The self-employed and those that work for small companies must take Medicare at 65 or they will be subject to a hefty late penalty. That penalty lasts a lifetime. People are afraid of the penalty, so they sign up for Part B “just to be safe” and end up spending thousands of dollars unnecessarily. Rarely can you justify paying for both your work health plan and Medicare.
Every situation is unique, so don’t make your decisions on speculation.
Sylvia Gordon is co-founder of The Medicare Family, headquartered in Noblesville, where she educates thousands on Medicare and Social Security in all 50 states. You can learn more at themedicarefamily.com.