Medicare & Creditable Coverage After 65
If you’re approaching age 65, you may be wondering whether to keep your employer coverage or switch to Medicare. The decision isn’t always straightforward, but ensuring your coverage is creditable is critical to avoiding penalties, coverage gaps, and unexpected medical costs.
Here’s what you need to know about comparing employer insurance with Medicare, making the right decision, and avoiding costly mistakes.
1. Why Creditable Coverage Matters After Age 65
Medicare requires creditable coverage if you delay enrollment past 65.
If your employer coverage doesn’t qualify as creditable, you could face lifelong late enrollment penalties and coverage gaps.
COBRA is NOT creditable coverage—relying on it can lead to major financial risks.
Key takeaway: Always confirm with your HR department or insurer that your coverage is Medicare-creditable. If it isn’t, enroll in Medicare at 65 to avoid penalties!
2. Medicare vs. Employer Coverage: Which Is Better?
Many people assume staying on an employer plan is better, but that’s not always true. Medicare often provides more comprehensive and cost-effective coverage.
How to Compare Employer Coverage & Medicare
Employer Plan Considerations:
Does your employer have 20+ employees? If not, Medicare automatically becomes your primary coverage.
What are your monthly premiums? Many employer plans cost more than Medicare.
What are your deductibles & out-of-pocket costs? Medicare may cover more at a lower cost.
Medicare Benefits to Consider:
Medicare offers nationwide coverage, while employer plans often have network restrictions.
No referrals required for Medicare Supplement (Medigap) plans.
Medicare Part B costs $185/month in 2025, which may be lower than employer premiums.
Medicare Advantage (Part C) plans include low or $0 premiums, with added benefits like dental, vision, and hearing coverage.
Key takeaway: Compare your total costs, coverage networks, and out-of-pocket expenses—Medicare may be the better choice financially and offer better coverage.
3. The Risks of Non-Creditable Coverage & COBRA
What Happens If You Have Non-Creditable Coverage?
If your employer plan isn’t creditable, or if you rely on COBRA after 65, you risk:
Late Enrollment Penalties: 10% lifetime penalty on Medicare Part B for every 12 months you delay enrollment.
Coverage Gaps: COBRA is not primary insurance after 65—major medical bills may not be covered.
Higher Medical Costs: Employer plans may exclude retirees from certain benefits, leading to higher out-of-pocket expenses.
Key takeaway: COBRA is not a safe alternative to Medicare. If you lose employer coverage after turning 65, enroll in Medicare immediately to avoid gaps.
4. Why Enrolling in Medicare at 65 Is a Smart Move
Lower costs: Medicare may cost less than employer coverage.
Better coverage: No pre-authorizations, nationwide access, and lower deductibles with Medigap.
Peace of mind: No worrying about losing employer coverage or being denied due to health issues.
Medicare Enrollment Periods to Know:
Initial Enrollment Period (IEP): The 7-month window around your 65th birthday.
Special Enrollment Period (SEP): If you delay Medicare due to employer coverage, you have 8 months to enroll after losing your job-based insurance.
General Enrollment Period (GEP): January 1 – March 31, but late penalties apply if you missed IEP/SEP.
Key takeaway: If you don’t have creditable coverage, enrolling in Medicare at 65 is the safest and most cost-effective choice.
5. Retirement & Health Coverage Planning: What to Do Next
Step 1: Verify Employer Coverage – Ask your HR department if your plan is Medicare-creditable.
Step 2: Compare Costs – Calculate your monthly premiums, deductibles, and max out-of-pocket expenses.
Step 3: Plan Your Transition – If retiring soon, enroll in Medicare on time to avoid coverage gaps.
Need Help Choosing a Medicare Plan? Consult a Medicare expert or visit Medicare.gov to compare plans and make the best decision for your retirement!
