Is Medicare my only option at 65?

For many Americans, working past 65 is a must in order to put away enough to retire. But when your Medicare open enrollment date overlaps with your employment, and you have other healthcare coverage options, which should you choose?

In this week’s column, Phil Moeller, the author of Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs and co-author of the updated edition of How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security, offers advice on this topic.

Should I keep my group plan and enroll in Medicare?

Earl: I will turn 65 soon. I currently have a private insurance plan with my wife. We’ve had this plan more than 20 years. It is very, very costly but even though I will be eligible for Medicare, we can’t just give up this policy, because my wife is eight years younger than me and so she will be too young to qualify for Medicare for a long time.

I also have the option to have coverage under my company’s group plan at work which offers either a PPO (preferred provider organization) or an HMO (health maintenance organization) in which the company pays 70%. We are a small company with less than 20 people, and I own the company.

I am not retiring until maybe 75, if ever!

If I receive Medicare, I will be paying what I regard as the discriminatory higher premium level falling under Medicare’s high-income surcharge.

It’s my understanding that I cannot stay with my private coverage if I enroll in Medicare.

Having said all of this, and with apologies for droning on a bit, if you were me, which coverage would you go with if cost was not a consideration? Medicare A and B with a Part D drug plan and a comprehensive Medigap plan? Or should I just have premium-free Part A of Medicare and keep my group plan?

Whatever I decide, do I always still need to sign up for Medicare A?

One last thing: I don’t take any prescriptions and rarely go to any doctor except annual physicals. I also am a non-smoker and in good physical shape.

Phil Moeller: If I sat down and tried to invent a scenario that illustrated how complicated health-insurance decisions can be, it might look a lot like Earl’s question!

Earl asked what I would do if money was no object. That’s easy. I’d keep the most comprehensive private plan for me and my wife, I’d get the most complete Medicare package that Earl described.

His concern that he cannot keep private coverage along with Medicare is unfounded.

Lots of people have both and, with the rise in high-deductible employer plans, it can make sense to do so.

The key here is to understand which policy pays first, which is secondary, and whether there are still unpaid expenses after both policies have paid. Such “coordination of benefit” questions used to be of concern mostly to insurance actuaries but have become important consumer issues in recent years.

Under Medicare’s rules, small employers such as Earl’s company are permitted to require their employees to get Medicare when they turn 65. At that time, Medicare becomes the primary insurer and the workplace plan provides secondary coverage. 

As the owner of the company, however, Earl is certainly free to continue providing employer coverage to all employees who are 65 or older, and then letting them decide whether they also want to get Medicare as secondary coverage, or perhaps simply drop the employer plan and rely totally on Medicare.

I did not recommend that solution to Earl, because he asked what I would do if I had unlimited funds for health insurance. 

In the real world, however, few people have unlimited funds. So, I’d first compare his wife’s very expensive coverage with what she could get as a covered spouse on his employee plan.

Because Earl earns enough money to get dinged with Medicare’s high-income surcharges (a nice problem to have, by the way), I’d seriously consider moving her onto the cheaper company plan and self-insuring for the things covered by the expensive plan and not the company plan.

I’d then probably get the company’s PPO plan, but would first make sure that the doctors my wife and myself want to use were in that plan’s provider network.

I’d then tell Earl to get only the premium-free Part A of Medicare and, as with his wife, self-insure for any expenses not paid by insurance.

Earl is in great health now, but if he needs more medical care as he ages (which is likely), he can then beef up his coverage by adding more pieces of Medicare.

These questions previously appeared on the PBS NewsHour Making Sen$e website.