How Does Medicare and Employer Coverage Work Together?

If you're still working when you become eligible for Medicare at age 65, you might also still have access to employer coverage. Many companies offer group health insurance policies, which provide a significantly more affordable way to get coverage compared to an individual policy.

But if you're wondering if you can use Medicare and employer coverage together, you're not alone. 

How Does Medicare and Employer Coverage Work Together?

You can use Medicare alongside employer coverage, but how it's used is determined by several factors. The most important factor is the size of your company, followed by the type of Medicare plan you have. 

If your employer has more than 20 employees, their coverage will be primary and you'll use Medicare as your secondary. In this scenario, it may make sense to choose only Medicare Part A, which is hospital coverage that's usually premium-free. 

Medicare will usually be your primary if your company has less than 20 companies. However, this depends on the type of group plan offered and how extensive the coverage is. If you're unsure, you can speak either with your company's human resource department or with the Social Security Administration to determine which insurance is primary. 

Who Pays for Your Medicare If You Are Working?

Medicare Parts B, C and D come with monthly premiums, as do Medigap plans. If you're still employed, you'll have to pay for these premiums yourself. However, there are some situations where your employer may reimburse these premiums in whole or part. To qualify for medical reimbursements, your employer has to have a Section 105 plan, which is governed by Section 105 of the Internal Revenue Code. 

Can You Keep Your Employer Health Insurance With Medicare?

Yes, you can keep your employer's health insurance with Medicare. However, Medicare will usually be used as secondary coverage. This means charges will be billed to your employer's health insurance policy first, and Medicare will only be billed for things that aren't covered by your primary. 

However, you may want to postpone enrolling in Medicare Part B or Part C until you stop working. While Part A covers hospitalization costs and doesn't have a premium, other types of Medicare coverage do. If you're already using a group health insurance policy, you'll save money by waiting.