Turning 65? Medicare vs. Your Employer Health Plan
What working adults should consider before choosing the right coverage for themselves and their families.
As Medicare’s annual Open Enrollment Period approaches, we hear this question often:
“I’m eligible for Medicare. Should I stay on my employer’s health plan or move to Medicare?”
The answer? It depends.
Turning 65 doesn’t automatically mean Medicare is the better choice. If you’re still working, the right decision depends on your employer’s plan, what you pay for coverage, your healthcare needs, prescriptions, and whether your family relies on your coverage.
Compare More Than the Premium
A lower monthly premium doesn’t always mean lower healthcare costs. When comparing Medicare with your employer-sponsored plan, consider:
Premiums, deductibles, and maximum out-of-pocket costs
Prescription drug coverage and costs
Whether your doctors and hospitals participate
How much your employer contributes toward your coverage
HSA eligibility, since enrolling in Medicare can affect your ability to contribute
Coverage for your spouse or children
That last point can be particularly important. If your spouse or children are covered through your employer’s plan, they generally cannot remain enrolled
as active dependents if you drop your own coverage.
The cost of finding replacement coverage for them needs to be part of your Medicare decision.
Don’t just compare your cost. Compare the total cost for your household.
Employer Size Matters, Too
If you’re actively working at age 65, your employer’s size can affect how Medicare coordinates with your group health plan.
For many employees, a group health plan from an employer with 20 or more employees generally pays before Medicare. With an employer of fewer than 20 employees, Medicare generally pays first.
Certain multi-employer plans and individual circumstances may operate differently, so it is important to confirm how your specific plan coordinates with Medicare.
This distinction matters. Delaying Medicare Part B when Medicare should be your primary coverage could leave you with unexpected gaps in coverage or unpaid medical expenses.
Before You Decide, Get These Five Numbers
What you currently pay for your employer-sponsored coverage
What replacement coverage would cost your spouse or children, if applicable
What your Medicare coverage would cost each month
Your employer plan’s maximum out-of-pocket cost
Your estimated out-of-pocket costs under Medicare
Then compare the total annual cost of each scenario—not just the monthly premium.
Don’t Forget Prescription Coverage and Your HSA
If you are considering delaying Medicare prescription drug coverage, confirm whether your employer’s prescription plan is considered creditable coverage. Your employer should provide a notice each year explaining whether the plan meets Medicare’s creditable coverage requirements.
You should also understand how Medicare enrollment may affect a Health Savings Account (HSA). Once you enroll in Medicare, you generally can no longer contribute to an HSA. Because Medicare coverage can sometimes be retroactive, consider discussing the timing with a knowledgeable advisor or tax professional before enrolling.
The Bottom Line
There is no one-size-fits-all answer. Medicare may be the better financial and coverage option for one employee, while staying on the group health plan makes more sense for another.
Before making a change, ask yourself:
What will I pay?
What could I pay if I need significant care?
How will my decision affect my family?
What coverage or provider access am I gaining—or giving up?
Turning 65 gives you another healthcare option. The goal is to determine which one provides the best combination of cost, coverage, and access for you and your family.
We’re Here to Help You Navigate the Decision
Healthcare decisions can be complicated, but you don’t have to sort through the options alone. Hickman & Knox helps employers and their employees understand their benefits, ask the right questions, and make more informed healthcare decisions.
Get in touch with our team before making changes to your current coverage.
Medicare rules can vary based on employer size, plan structure, employment status, and individual circumstances. Medicare’s annual Open Enrollment Period is separate from the Initial Enrollment Period generally available when someone first becomes eligible at age 65. Before delaying Medicare enrollment, making HSA contributions, or dropping employer-sponsored coverage, confirm how the rules apply to your specific situation.
Written by Amber Hickman, Director of Benefits Consulting, Hickman & Knox, a Watson & Knox affiliated agency specializing in employee benefits.