Employees turning 65: Employer health plan or Medicare?

By Greg Dattilo, CEBS, CEO, Dattilo Consulting, Inc.

The Bureau of Labor Statistics estimates “…that 13 million Americans aged 65 and older will be in the labor force by 2024.” [i] Some may work for your company.

You already know that many trusted and experienced long-term employees want to continue working after age 65. In many respects, these can be some of your most valuable employees.

Inflation trends and the effect this is having on retirement planning may drive more elders into the workforce. It is imperative for employers and employees to consider their health insurance options.

The employee should carefully consider whether, as an elderly employee, he or she should leave the company’s health plan and enroll in Medicare or stay on the employer’s plan. Both the employee and employer will want to seek wise counsel as there are advantages and disadvantages for each.

There are various compliance requirements that employers must meet regarding choices made by their Medicare-eligible employees. The employer should talk with a qualified benefits consultant about these legal and other H.R. issues with the benefit plan for employees aged 65 or older.

Short list of considerations

Employers use their benefit plan in part, as an incentive to keep employees working. It is expensive to hire and train new people. And healthier employees are more profitable than those with failing health and untreated medical conditions.

Some employees who face health challenges may prefer enrolling in Medicare and dropping the employer plan. Can they do this? Yes. Is there a right way and a wrong way to answer the question? Absolutely.

Each case should be carefully evaluated to ensure the employee’s needs and rights are being met. The employer will want to seek advice from qualified advisors so as to provide accurate and timely information to the employee. Here is where it can get tricky.

The Medicare plan options and supplements from which an employee might choose could have many advantages, or disadvantages. For certain, one size does not fit all.

A happy employee will feel he or she made the best decision among many options. They need good advice to do this. We advise employees who are nearing 65 (or older) to seek the advice of a qualified, licensed consultant who has Medicare enrollment experience. Making the right decision can save the employee money while maintaining good health and keep him or her productively working at your company.

[i] Edleson, H. (2019) “More Americans Working Past 65.” AARP. Washington, D.C. 4/22/2019. https://www.aarp.org/work/employers/americans-working-past-65/ Retrieved on 6/21/2022