Do Retirement-Age Workers Need to Enroll in Medicare?

According to the Census Bureau and Bureau of Labor Statistics (BLS), the percentage of retirement-age Americans in the labor force has doubled since 1985, from 10 percent in January of that year to 20 percent in February 2019. With more employees over the age 65 in the workforce, employers need to know what to do when it comes to their benefits—whether they retire at 65 or not.

Do Employees Need to Enroll in Medicare at Age 65?

If an employee turns 65 and is still an active employee at a company that offers group health insurance, the employee does not have to enroll in Medicare as long as the company has 20 or more employees. Active employment means that the individual over 65 or their spouse is actively working for the employer that provides their insurance—it does not include retiree benefits or COBRA.

Employees have three options when they turn 65. They can choose to stay on the employer’s group plan (which is required by law to be the same coverage as younger employees), enroll in Medicare and decline employer coverage, or stay on the employer’s plan and enroll in Medicare. One thing to note is that employees who choose to stay on their employer’s plan and enroll in Medicare cannot contribute to a Health Savings Account (HSA) six months prior to enrolling in Medicare.

If the company has less than 20 employees, then it’s up to the employer whether or not the retirement-age employee is required to enroll in Medicare. In these instances, employers can either discontinue coverage through the group plan, or allow the employee to keep the employer-sponsored plan as secondary coverage.

What If Employees Do Transition to Medicare?

If employees move from their employer-sponsored insurance to Medicare, whether they’re retiring or not, employers should play a role in making sure they’re prepared. 

Employees have a seven-month enrollment period during which they’re eligible to enroll in Medicare, which begins three months before the month the employee turns 65 and ends three months after the month they turn 65. After that, individuals may face gaps in coverage or penalties. 

Employers can help by encouraging employees to research Medicare coverage before they turn 65 and set reminders to enroll during the initial enrollment period so that they don’t face expensive penalties or a gap in coverage. If employees have questions about transitioning to Medicare, they can visit the Medicare website.