Longer life expectancy keeps many workers motivated to stay on the job well into their late 60s, 70s and beyond.  In fact, a google search will reveal several like Sally Gordon who continue working past age 100. With Medicare eligibility beginning at age 65, many must decide whether Medicare is a better option than their current employer health plan.

Not everyone chooses to sign up for Medicare immediately. Some have good reasons to defer. Others delay only because they find the ABCs and Part D of Medicare overwhelming. It’s hard to blame them. My eyelids become very heavy with every 4 of the over 100 pages of the 2013 Medicare & You handbook – and I’m paid to enjoy this stuff.

Even so, signing up for Medicare is the right decision for many who stay on the job. With one exception, everyone who is eligible should sign up for Part A. This premium free policy covers the costs of staying in a hospital or skilled nursing facility.

HSA Users Beware!

The one exception is those who are enrolled in a high-deductible health plan. Under IRS rules, you cannot continue to contribute to a HSA account if you are enrolled in Medicare or are receiving Social Security.

If your employer has fewer than 20 employees you may be required to sign up for Part B insurance which costs between $104.90 – $335.70, depending on income. In this case, Medicare becomes the primary payer and your group health insurance becomes secondary. If you ignore this or forget to sign up for Medicare and you incur medical bills, it is possible that your employer health plan would pay ZERO for any medical bills. Ouch!

Some in this situation are better off dropping their employer health plan since paying for two plans can be quite costly and provide little advantage.

Large Employers Have Special Rules

Those insured by an employer with 20 or more employees or through spouse in this situation do not need to sign up for Medicare because their current plan remains the primary payer. Assuming you delay beginning Medicare, you will be given a “Special Enrollment Period” (SEP) to enroll without penalty up to eight months after you retire.

If your health plan has limited drug benefits, you may choose or be required to sign up for Medicare’s drug program, Part D. Not all employer health plans offer robust Rx coverage and Medicare could offer the most cost effective alternative. It’s important to study your current employer health insurance to identify and coverage gaps which are also known as “donut holes” in the insurance world. Not the kind you eat but the kind that eat you.

If you are maintaining your employer health plan while also joining Medicare, you need to note this on your “Initial Enrollment Questionaire” (IEQ). About 3 months before you enroll, Medicare will send you a letter with a username and password for Medicare.gov where you will fill out your (IEQ).

Most will be able to find assistance in coordinating Medicare and their employer health insurance plan with their company HR department. Only after this local approach proves unhelpful would I encourage you to seek advice from the Medicare hotline or your local Social Security office.