The traditional notion of retirement — a switch from full-time work to full-time leisure — is becoming a thing of the past for millions of Americans. In fact, according to a recent UnitedHealthcare survey (conducted by Wakefield Research on behalf of UnitedHealthcare) of 1,000 nationally representative Americans 62 and older, 24% of those who did retire chose to re-enter the workforce.
Delaying retirement or returning to work may influence your Medicare decisions. Here are some points to keep in mind if you plan to continue working past your 65th birthday or return to work.
Why enroll in Medicare at 65?
Timing matters when it comes to signing up for Medicare. If you’re about to turn 65, you have a seven-month window called an Initial Enrollment Period (IEP). That includes the month of your birthday, the three months before and the three months after.
If your 65th birthday is on June 15, your IEP starts March 1 and ends Sept. 30.
If you don’t have health insurance through your employer, your IEP is the time to figure out which Medicare coverage would work best for you.
If you have coverage through your employer and plan to keep working, check with your HR department or benefits administrator to see how Medicare might work with your employer coverage. Many sign up for Medicare Part A at age 65 either way since most get it without paying a monthly premium.
How Social Security benefits can affect your Medicare enrollment
If you already receive Social Security benefits when you turn 65, you’ll be automatically enrolled in Original Medicare (Parts A and B), and your Medicare card will arrive before your 65th birthday.
Your Part B premium will be automatically deducted from your Social Security payments. If you don’t want Medicare Part B, notify Medicare to opt out.
Many wait to claim Social Security until their 66th birthday or later to increase their monthly payments. If you fall into this group but still want Medicare coverage when you turn 65, it’s up to you to enroll because it won’t happen automatically.
Penalties for delaying Medicare enrollment
If you’re planning to work beyond 65, you may be able to wait until you retire to enroll in Medicare. For many, that’s the right choice, as their employer coverage is more robust. But consider your prescription drug coverage, and when you’re ready to retire, be aware of the enrollment windows to avoid penalties.
If your employer plan doesn’t offer prescription drug coverage, or if the coverage isn’t as good as Medicare, consider enrolling in a Medicare Part D prescription drug plan. That’s because Medicare imposes a permanent late enrollment penalty that will increase your monthly premium if you later decide to sign up for a Part D plan. You must be enrolled in Part A and/or Part B of Medicare before you can enroll in Part D.
When you retire or lose your employer coverage, you’ll be eligible for a Special Enrollment Period (SEP). You can enroll in Parts A and/or B for up to eight months after the month you retire or your employer health plan coverage ends, whichever comes first. But if you delay beyond eight months, you could pay more for your Part B premium — for as long as you have Part B.
For each year you delay enrollment in Part B, an extra 10% is added to your premium.
Want Medicare Advantage or Part D when you retire? Your enrollment window is shorter.
When people sign up for Medicare, many also choose to enroll in a private Medicare plan — either a Part D plan or a Medicare Advantage plan (Part C).
Many Medicare Advantage plans provide additional benefits beyond those of Original Medicare (Parts A and B), such as dental, hearing and vision coverage. Most plans also bundle in prescription drug coverage and fitness or gym programs.
But the window to sign up for these plans is shorter than for Part B — only two months. To avoid a lapse in coverage, time your enrollment accordingly.
Just because you delay your retirement doesn’t mean you should delay your Medicare enrollment. Talk to your HR or benefits coordinator at work to get personalized advice based on your needs.