Group insurance through your employer: The plan implications of Medicare

Tony MontgomeryMedicare

One of the most common questions we receive are the implications of group insurance through an employer versus enrolling in Medicare. Whether you should take Medicare or keep your qualified employer sponsored health insurance plan depends on your financial circumstances.

For instance, the number of employees and the types of plans offered by an employer is a significant factor in whether you should take Medicare. However, there are also consequences for tax-advantaged health savings accounts (HSAs) when you enroll in Medicare.

Listed below are some of the implications of how Medicare will affect your health insurance.

"Consider your financial circumstances before enrolling in Medicare."

Should you take Medicare if you are still working?
If you are nearing 65 and still working, you should know that you are not required to take Medicare. You can sign up later when you retire, so long as you or your spouse are covered by employer sponsored group health insurance in the meantime.

Depending on the size of your company and the type of group insurance plan offered by your employer though, you should consult your benefits administration to determine how Medicare would work with your current insurance.

For example, according to Medicare.gov, for companies with under 20 employees, there is a chance that your qualified employer sponsored health insurance plan would be the secondary insurer to Medicare. The opposite is most likely true for companies with more than 20 employees.

How HSAs work with Medicare
Many people approaching 65 do not realize that if they enroll in Medicare Parts A or B, they will lose the tax-free benefits of HSAs. This is important because you may be contributing to your HSA, but it is possible your administrator is unaware that your account is subject to tax. You should consult with an expert about this because the Social Security Administration may not be aware of this either.

The number of employees and the type of plan affects HSAs as well. For instance, according to Medicare Interactive, if you work at a smaller company with less than 20 employees, you may decide to enroll in Medicare – in which case, you could lose the tax-advantaged status of an HSA. Another example: Let's say even if you work at a company larger than 20 employees and have a qualified employer sponsored health insurance plan that is primary to Medicare, you may also lose the tax-free benefit because you enrolled in Medicare.

That is why it is vital that you find out more about how Medicare will affect your healthcare costs and HSAs. This is where we can help. Our team can sit down with you on a one-to-one basis to show you the Medicare landscape and how it affects you specifically so that we can provide you with creative solutions to best fit your needs.

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