65 and Still Working

When it comes to retirement, 65 may be the new 45, at least for some people. With good health and better health care, many of us are feeling good and maintaining an active lifestyle well into our later years.

I like to tell people attending my retirement seminars about a man who was hired into federal service at age 74 and worked for 22 years before retiring at 96. Then I ask them how long they think he got to enjoy his retirement. The answer: 11 years. He died at age 107. The moral of this story is that retirement dates are different for everyone and only you will know when the time is right for you.

According to a recent analysis from the Office of Personnel Management, more than 177,000 federal employees are between 60 and 64 years old, and almost 85,000 more are 65 or older. This might explain why I get so many questions from employees who are confused about enrolling in Medicare at 65.

So this week I wanted to focus on a single question: What should you do about Medicare if you’re still working for the government at 65?

The information I’m providing applies to the following situations:

• Single federal employee approaching age 65 who is covered under the Federal Employees Health Benefits Program.
• Married employee approaching 65 who is covered under FEHBP.
• Spouse of a federal employee who is approaching 65 and is included in that employee’s FEHBP coverage.

If you’re in one of these situations, it would make sense for you (or your spouse who is turning 65) to contact Social Security about three months before your birthday (or within three months afterwards) to enroll in Medicare Part A, which provides hospital insurance. (You might not be contacted by Social Security to enroll, since you’re not retired and aren’t receiving Social Security retirement benefits.) You can use the Social Security website or enroll over the phone at 1-800-772-1213.

The only time you or your spouse would use Medicare Part A coverage is if you are ordered to stay overnight in the hospital by your doctor. (Part A doesn’t cover outpatient hospital care or observation in a hospital.) Even though your FEHBP plan will be the primary payer while you are employed, Medicare may cover some services that your FEHBP plan might not pay for.

There’s no premium for Part A since you’ve paid the 1.45 percent Medicare tax from your salary (and will continue to pay this tax as long as you are employed). If your spouse did not work outside the home, the tax you paid will make your spouse eligible for Medicare. Medicare enrollment is individual, so you and your spouse will need to sign up for Medicare individually.

If you are older than 65 and did not enroll in Part A, you should contact Social Security to enroll and to find out when your enrollment will be effective.

After signing up for Part A, you should contact your FEHBP plan to let them know you have enrolled and to inform them that you are not retiring, even though you are turning 65. This will help your insurance plan make the correct payments to your providers. While you are at it, you might also want to contact your physicians to let their billing offices know that your FEHBP coverage will continue to be your primary insurance, since you have not retired and aren’t planning to enroll in Medicare Part B until after you retire. These phone calls are important, since some of the insurance plans have their billing systems set up to automatically bill Medicare first when a participant reaches age 65.

There’s no need to enroll in Medicare parts B, C, or D if you are still employed, since you will maintain your FEHBP coverage as your primary insurance. If you are still covered by current employment health benefits and you have enrolled in Part B (which covers outpatient care and doctor visits), you may wish to cancel your enrollment until you (or your spouse) retire. Here is the procedure to cancel Part B enrollment.

You’ll have a special enrollment period following your retirement during which you can enroll in Part B without penalty. This period begins the month after you retire and lasts for eight months. This would be the time to consider Part B enrollment, since Medicare will become your primary insurance after you retire (if you enroll) and FEHBP will be the secondary payer.

My general recommendation is that retirees 65 and older consider enrolling in Part B and changing their FEHBP coverage to a plan that provides low premiums and incentives to enroll in Part B (usually out of pocket savings on deductibles, coinsurance and copayments). Check Section 9 of your FEHBP plan brochure for more info.

You will not need to enroll in Medicare Part C if you maintain your FEHBP coverage in retirement. You have the option of suspending your FEHBP coverage after retirement if you choose to use a Part C (sometimes referred to as “Medicare Advantage”) plan instead of FEHBP.

Medicare Part D provides prescription drug coverage. Most federal employees and retirees who have FEHBP coverage will not need additional prescription coverage through Part D. If you find your prescription expenses become excessive, you might consider switching to a different FEHBP plan or adding a Part D plan to provide additional drug benefits.

One final tip: Federal employees and retirees have a personal FEHBP open season that can be used once after turning 65. This option to change FEHBP coverage midyear allows you to change plans to coordinate with Medicare enrollment or deal with a medical condition that requires treatment that is covered more comprehensively under a different FEHBP plan.