Medicare vs. Employer Insurance: What You Need to Know If You're Still Working

As you approach the age of 65, you may start thinking about how Medicare fits into your healthcare coverage. If you’re still working and have employer-sponsored insurance, understanding how Medicare works alongside your current plan can feel confusing. The good news is that you don’t have to figure this out on your own. Medicare can coordinate with your employer health insurance in several ways, but there are important details you should understand.

This blog will help clarify the differences between Medicare and employer insurance, explain how both can work together, and provide insight into when you should sign up for Medicare if you're still working. If you’re looking for a more in-depth explanation, we offer a free online Medicare class where we answer many common questions. You can check it out at www.simplemedicareclass.com.
Understanding Medicare and Employer InsuranceMedicare is a federal health insurance program primarily for individuals aged 65 and older, but also for some younger people with disabilities. The program is broken down into four parts:

• Part A: Hospital coverage
• Part B: Medical insurance
• Part C: Medicare Advantage Plans
• Part D: Prescription drug coverage

If you are still working and have employer-sponsored insurance, you may be wondering how these two coverages interact. Should you sign up for Medicare at age 65, or can you continue with your employer’s insurance? Understanding this can help you make an informed decision about your healthcare coverage.
When Should You Enroll in Medicare?Medicare eligibility begins at age 65 for most people. But if you're still working and have employer-sponsored insurance, you might be unsure whether you need to sign up for Medicare or if you can delay enrollment. The answer depends on the size of your employer and the type of health insurance plan you have.
1. Small Employer (Fewer than 20 Employees)If your employer has fewer than 20 employees, Medicare will be your primary insurance once you turn 65. This means you need to enroll in both Medicare Part A and Part B when you're first eligible, even if you’re still covered by your employer’s health insurance. If you don't sign up for Medicare during your Initial Enrollment Period (the 7-month window around your 65th birthday), you may face late enrollment penalties. So, it’s important to make sure you enroll in Medicare to avoid unnecessary costs.
2. Large Employer (20 or More Employees)If you work for a company with 20 or more employees, your employer's health insurance will generally be your primary insurance. In this case, you can delay enrolling in Medicare without facing penalties, as long as you’re still covered by your employer’s plan. However, you’ll still need to sign up for Medicare during your Initial Enrollment Period to avoid penalties later on, even if you choose not to use Medicare right away.
In many cases, you may want to enroll in Medicare Part A, even if you are still working. Most people qualify for Part A without a premium, so there is little downside to signing up. However, enrolling in Part B (which has a premium) is optional if you’re still covered by an employer plan.
Coordination Between Medicare and Employer InsuranceWhen you have both Medicare and employer insurance, it’s important to understand how the two will coordinate. Medicare and employer insurance are designed to work together, but the order in which they pay for your healthcare services depends on the size of your employer.

• For small employers (fewer than 20 employees): Medicare is the primary payer, and your employer’s insurance acts as secondary coverage.
• For large employers (20 or more employees): Your employer’s insurance is primary, and Medicare becomes secondary.

Understanding how Medicare and employer insurance coordinate can prevent you from paying unnecessary costs. It’s important to check with your employer’s benefits office to confirm how your employer plan works with Medicare, so you can be sure you’re covered without overpaying.
Comparing the Costs of Medicare and Employer InsuranceOne of the most significant differences between Medicare and employer insurance is how much you pay for your coverage. Let’s compare the costs of both options:

• Medicare:
  • Part A is usually free if you’ve paid Medicare taxes for at least 10 years through employment. However, there are deductibles and coinsurance costs for hospital stays and skilled nursing services.
  • Part B has a standard monthly premium, which for 2025 is $164.90, though this may vary based on your income. In addition to the premium, there are deductibles and a 20% coinsurance for most services.
  • Part C (Medicare Advantage Plans) combines Medicare Parts A and B and often includes extra benefits like prescription drug coverage, dental, and vision. These plans may have additional premiums, coinsurance, and deductibles.
  • Part D is for prescription drug coverage, and you’ll typically pay a premium in addition to the Part B premium. The cost varies based on the plan you choose.
• Employer Insurance:
  The cost of employer-sponsored insurance depends on your employer’s plan, but premiums are typically deducted from your paycheck. Larger employers usually share the cost of premiums, which can lower your monthly costs. However, like Medicare, there are copayments, deductibles, and coinsurance for medical services.

In some cases, the combined coverage from Medicare and your employer plan may help reduce your out-of-pocket costs. However, you’ll need to review your employer’s plan to determine if it covers everything you need and whether you can benefit from Medicare’s additional coverage.
Should You Keep Your Employer Insurance or Switch to Medicare?Choosing whether to keep your employer’s insurance or switch to Medicare is a personal decision. Here are some factors to consider:
Staying with Employer Insurance

• Pros:
  • No need to enroll in Medicare if your employer has more than 20 employees.
  • Your employer’s insurance may offer a wider network of doctors or benefits that Medicare does not cover.
  • If your employer covers part of your insurance premiums, you may have lower monthly costs.
• Cons:
  • If you delay enrolling in Medicare, you may face late enrollment penalties when you do decide to sign up later.
  • Your employer’s insurance may not provide all the coverage you need, which could leave gaps that Medicare could fill.

Switching to Medicare

• Pros:
  • Medicare offers more predictable costs, which can be especially beneficial for those on a fixed income.
  • You can choose from different Medicare Advantage plans or supplemental plans to tailor your coverage to your needs.
  • Medicare covers certain services, such as hospice care or preventive care, that employer insurance might not.
• Cons:
  • You may have to pay additional premiums, deductibles, and coinsurance for Medicare.
  • If you enjoy the network of doctors and services covered by your employer’s plan, switching to Medicare might require you to find new healthcare providers.

​
What Happens If You Don’t Sign Up for Medicare?If you don’t sign up for Medicare when you're first eligible and you don’t have coverage from a large employer, you may face late enrollment penalties. These penalties will increase your monthly premiums for as long as you have Medicare. It’s crucial to enroll during your Initial Enrollment Period to avoid these extra costs.
​
How We Can HelpIf you’re unsure about when to sign up for Medicare or whether you should keep your employer insurance, we’re here to help. Our team at Simple Medicare Class offers a free online class where we explain the ins and outs of Medicare and answer your questions. We also offer one-on-one assistance to help you make the right decision.

To speak directly with a Medicare expert, call us at 1-888-394-0149. We can help you understand your options and ensure you're making the best decision for your healthcare.

Choosing between Medicare and employer insurance when you’re still working is a decision that requires careful thought. The right choice depends on your situation, including the size of your employer and the specific coverage you need. Both options have advantages and costs, but understanding how they work together can help you make a decision that’s best for you.

If you need more information or want to get started with Medicare, be sure to check out our free online class at www.simplemedicareclass.com, or give us a call at 1-888-394-0149. We’re here to help you understand your Medicare options and ensure you're fully prepared for this important change in your healthcare coverage.

CALL US NOW