Can employers force you to choose Medicare
Americans are living longer than ever, with a life expectancy of nearly 80 years. Because people are growing older, but remaining healthy, 65 is the new 45, according to Wes Moss. Baby boomers are finding themselves willing and able to work well past their Medicare age. This poses the question, “Can employers force you to choose Medicare?”
With Medicare, the answer usually isn’t cut and dried. Even the short answer to this question leaves you wondering. The short answer is: it depends. It depends on factors such as if you’re actively working and how big your employer is.
With that said, the answer is usually no, your employer can’t force you to choose Medicare. Let us explain.
Active, large employer coverage
Legally, employers of any size cannot force you onto Medicare and off of their health insurance if you are actively working. This is especially true with employers who employ 20 or more employees. Large employer health coverage is primary coverage, while Medicare is secondary. Therefore, as long as you are currently working for your employer, they must allow you to keep their coverage even past Medicare age.
Because Medicare pays secondary to large employer coverage, you can delay Medicare enrollment until you lose said coverage. This allows you to save money on Medicare premiums while you’re still eligible for your employer’s coverage.
However, Medicare Part A costs most people nothing at 65, and therefore, can be added on without any extra money upfront. On the other hand, if you plan to contribute to a health savings account, delay all parts of Medicare as contributing to a health savings account while on Medicare is illegal.
The same rules apply for Medicare-eligible spouses of active workers. If your spouse is eligible for Medicare and on your employer’s health coverage, and you are actively working, the employer cannot force your spouse to choose Medicare at 65.
Active, small employer coverage
If you are actively working for a small employer, the employer can’t drop you from their coverage once you become eligible for Medicare. However, because small employer coverage pays secondary to Medicare, you need to enroll in Medicare Part A and Part B.
If you fail to enroll in Part A and Part B at 65 while on small employer coverage, your employer coverage won’t pay anything as Medicare should pay first.
Also, not enrolling when you’re first eligible, even with small employer coverage, means late penalties in your future. For example, for every year you go past 65 without Part B, you gain a 10% late penalty that will be added to your premium once you finally enroll. Remember, this isn’t the case for people actively working with large employer coverage since large employer coverage is primary to Medicare.
Retiree coverage is a whole different ball game in this scenario. If you are retired and have your former employer’s retiree coverage, regardless of the size of the employer, the employer can force you onto Medicare and off of their coverage at 65. The difference between the two types of coverages above and retiree coverage is the fact that you aren’t actively working. Because you aren’t an active employee, the employer is not required to offer your health insurance.
Retiree coverage is similar to small employer coverage in the way that it pays secondary to Medicare. So, if your former employer allows you to keep your retiree coverage past 65, then you will still need to enroll in at least Part A and Part B. Failing to do so will cause you to gain late penalties and risk not being covered.
In most cases, employers cannot force you to choose Medicare at 65. However, there are situations where enrolling in Medicare is necessary. If you are unsure of your employer’s size and/or rules, contact your employer’s HR department before your Initial Enrollment Period for Medicare is over.
Danielle K. Roberts is a Medicare insurance expert and co-founder at Boomer Benefits, where her team of experts help baby boomers with their Medicare decisions nationwide.