#29 – 52- Creditable – When Working Past Age 65

Depending on where you are in the nation, summer has made its presence known in one way or another. From blistering heat to endless grass mowing to evening fireflies… Summer has certainly not deferred its entrance. 

Here in my area, our temps are well into the 100’s now. Even pool water fails to provide a cooling alternative when the water temperature starts to hold at 90 degrees. As a result, most of our planned gatherings have moved under the shade and comfort of water misters or indoors. 

This weekend our neighbors greeted us while we gardened at 6 AM. They were heading up North to cool in the shade of the pines for a few weeks and asked us to keep an eye on their house. Our polite conversation led to my neighbor Jim mentioning his plan to retire after the holiday. “I’ve had enough of the valley heat,” he remarked. “Amy and I are going to prepare the cabin for full-time living when I retire in December. We’ll put up the Christmas tree, and after the holidays, when the kids go home, we will put the ‘for sale’ sign here.” 

“SO jealous, Jim! I know you and Amy love your time up North, and it will be great not to have to go back and forth,” my husband remarked. “Yeah, it’s been a tough decision, but I will be 65 in December too, and my company said I could keep a few clients and work remotely until I am ready to leave fully. That makes it easy to glide into retirement and continue my health insurance too.”

Hearing Jim’s comment on turning 65, I remarked, “Hey Jim, before you plan to continue your employer plan in December, let’s chat. I would hate for you to miss a few opportunities with Medicare.” I briefly touched on the topics of creditable coverage and Medicare. Jim said he would call me when they returned in a few weeks to create a strategy for his healthcare plan to ensure he would make choices that would eliminate risk and penalty for his Medicare. “I didn’t know there were advantages to talking about Medicare this early! I certainly don’t want to start my retirement by making the wrong choices!”

Below are some of the concerns I raised for Jim.

Is his employer plan considered “Creditable Coverage”?

Creditable coverage means the employer’s health and prescription drug plan meet a minimum set of qualifications to make them as good or better than Medicare. As a result, a person may postpone enrollment in Medicare without worrying about being penalized and forced to pay a later enrollment penalty if their plan is creditable.

Medicare defines a company as ‘large’ if 20 or more employees are enrolled on a healthcare plan. Most large employers have health plans that are considered creditable. Generally, the insurance carrier will send out an annual notice of change around September, informing subscribers if the drug plan is creditable or not. An employer’s benefits coordinator or HR representative is the best person to contact for information about a plan’s creditability.

Jim’s employer is an engineering firm of only ten employees and the benefits under his employer plan are not considered creditable. So if Jim deferred his Medicare enrollment when he is eligible in December, it would be a mistake. In addition, Jim could incur considerable late-enrollment fees for the lifetime of his Medicare if he defers enrolling when he is first eligible. 

Jim’s next step is to meet with a Certified Medicare Planner® to go over his Medicare options, so he will be prepared to enroll- OR, better yet, attend a free 123Easy Medicare workshop to learn what Medicare is. Meeting with a planner six months before turning 65 allows the retiree to prepare for a transition to Medicare smoothly. In addition, learning about Medicare helps employees understand all their options and pick a Medicare plan to replace the benefits they enjoyed as active employees. 

Could he go on COBRA? Nope! COBRA is not considered creditable per Medicare, so this is not an option for Jim either. 

Contributing to his HSA and other considerations

Meeting with a Certified Medicare Planner® will help retirees create a timeline for transition. They know appropriate questions to make the transition easier and help them avoid mistakes that could be costly later, like not stopping HSA contributions before going on Medicare. 

HSA contributions must stop months before enrolling in Medicare, but withdrawals can continue and be used for medical expenses, including paying for some Medicare insurance premiums.

Making Medicare Transition Easy

Most employees are used to their employer plan and will elect what they know and are comfortable continuing. That includes resourcing their employer benefits partner for advice too. Since you are not expected to be an expert in everything Medicare, that’s where having a transition partner comes in handy. We provide resources for Medicare education and ongoing support after enrollment. When you have a transition partner to refer them to for guidance, they appreciate you for the dedicated help.

Employees should not pay for Medicare advice either. However, insurance companies will pay us if an employee chooses to enroll in a Medicare plan. So our expert services provide confident transition resources without obligation or cost.

When employees are turning 65 and ready to retire,  let them know they have even more options for healthcare coverage, particularly if you are a small business with benefits that might not be creditable to those over 65. And partner with experts to make Medicare decisions 123easy.

Need guidance on how to support your employees with other possible scenarios and helpful solutions?

Our Certified Medicare Planners® have more than 20 years of experience helping employees create Medicare transition plans BEFORE they need to enroll. We are ready to help!

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– Lora