Medicare and Employer Coverage – Which is Right For You?

Nov 9, 2021

Older adults now more than ever are working past the age of 65. Typically, Medicare-eligible individuals at this age can be left wondering what to do between Medicare and employer coverage. Is it worth it to keep your employer-sponsored health insurance? Or is Medicare the better option? Let’s take a look.

What Does Medicare Cover?

Any U.S. citizen or permanent resident who has paid or spouse has paid at least 10 years’ worth of Medicare taxes is eligible for a Medicare plan. Medicare consists of four parts:

Do I Have To Enroll In Medicare When I Turn 65 If I’m Still Working?

While Medicare may sound appealing, you may be wondering why you should use it if your employer-sponsored health care covers your needs. There are a few considerations to make.

First, you may be required to enroll in Medicare if your employer has fewer than 20 employees. That’s because once you turn 65, your employer is no longer the primary payer for your healthcare. Medicare is.

Second, if you do not enroll when first eligible and your employer has fewer than 20 employees, you may face a penalty. Late enrollment in Part B causes your monthly premium to rise 10% for each year you’ve been eligible but have gone without coverage. If you do have employer-sponsored coverage from a large employer (more than 20 employees), you’re not required to enroll because you have the required coverage. Just be sure to sign up for Medicare Part B during your special enrollment period within eight months of leaving your job.

How Does Medicare Work with Employer Coverage?

Often, you can add on Medicare coverage even if you still have your employer-sponsored insurance. This is a good idea if your spouse is under the age of 65 and would not be eligible for Medicare — but you can still take advantage of better coverage options.

Medicare can also fill in gaps in your employer-based healthcare coverage. For example, many health plans are limited in what they cover for extended hospital stays, special medical equipment, and other needs that are more common among older adults. Therefore, adding Medicare to your coverage can provide peace of mind for future health issues while minimizing your out-of-pocket costs.

Comparing Medicare and Employer Coverage

Most Medicare coverage is designed to meet the needs of older Americans. This means it covers more of outpatient visits (physical therapy, regular doctors’ visits, etc.) and inpatient care (hospital stays, etc.) than typical employer-sponsored health insurance.

However, Medicare Parts A and B (Original Medicare) do not have caps on your out-of-pocket costs, unlike many employer-sponsored plans. So, a severe illness or catastrophic injury could still present financial challenges once you exceed your allowable coverage. Original Medicare also does not cover dental and vision care.

Medicare Advantage (Part C), a popular option among Medicare beneficiaries, does cap out-of-pocket costs and include a Prescription Drug plan. It’s best to compare your monthly costs with your employer-based health insurance to those of a Original Medicare or Medicare Advantage plan to see which option is best for you.

Generally, though, Medicare Part A is worth enrolling in once you’re eligible. You’ll avoid gaps in coverage and can ensure that you have access to extended inpatient care.

Get a FREE individual cost-benefit analysis to find out which health coverage option is best for you

Benefits of Medicare vs. Employer Coverage

Your employer-sponsored health insurance can certainly have some great benefits. However, depending on the level of coverage you receive with your employer,  Medicare can also provide equal or even better benefits.

For example, Medicare Part A covers 100% of allowable expenses for 60 days of inpatient care, while you may have to pay up to 60% of those costs under your standard insurance. And Part B covers up to 80% of everything from preventative care and diagnostic tests to medical equipment such as wheelchairs and oxygen tanks — all of which adds up.

Overall, Medicare features lower premiums and out-of-pocket costs. Many employer-sponsored plans have a monthly premium of at least $99 to $150. With the exception of high-income Americans, most Medicare recipients end up paying much lower premiums.


More often than not, an employer-based health insurance plan is not the best option for a healthy individual. If you are healthy and working, you can probably save money by enrolling in Medicare, whether as a replacement to your plan or an addition. Additionally, Medicare can be affordably added onto employer coverage for those who want to be proactive about their health and prepared for any medical emergencies. 

Speak with a licensed Independent Insurance Agent to discuss which coverage option is right for you.

Nov 9, 2021 | | 0 comments


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