Retiree insurance & Medicare

Your (or your spouse’s) job may offer health coverage when you retire. It’s important to understand how retiree coverage works with Medicare. Talk to your job’s benefits administrator to find out. You’ll want to know:

If your (or your family’s) current benefits will change
If they offer creditable drug coverage
If they offer supplemental coverage that works with Medicare

What happens when I turn 65?

When you become eligible for Medicare, you may need to enroll in both Medicare Part A (Hospital Insurance) and Part B (Medical Insurance) to get full benefits from your retiree coverage. You have a limited time to sign up for Medicare without paying a penalty.

Retiree coverage might not pay your medical costs during any period of time when you were eligible for Medicare but didn't sign up for it.

Sometimes retiree coverage includes extra benefits, like coverage for extra days in the hospital. In other cases, your employer or union may offer retiree coverage for you and/or your spouse that limits how much it will pay. For example, it might only start paying your out-of-pocket costs when they reach a maximum amount. For details on your retiree coverage, check with your benefits administrator.

If you have both Medicare and retiree coverage from a former employer, generally Medicare pays first for your health care bills. Medicare will submit any amount it doesn’t cover to your retiree plan.

For more information about how your retiree coverage works with Medicare, you can:

Contact your employer's benefits administrator.
Ask your benefits administrator for a copy of your plan's benefit booklet.
Review the plan’s description provided by your former employer or union.

How does retiree coverage work with Medicare drug coverage?

You can choose to join a Medicare drug plan when you sign up for Medicare Part A and/or Part B. If you choose not to join a Medicare drug plan, you’ll need to have creditable drug coverage to avoid paying a Part D late enrollment penalty.

Creditable drug coverage is coverage that provides the same value as Medicare drug coverage. If you’re not sure your retiree drug plan is considered creditable, ask your plan – they have to tell you. Your plan will also send you this information every year.

Before you make any decisions, check with your retiree coverage to find out if you’ll lose retiree coverage (including any non-drug health coverage) for yourself and/or your spouse or dependents if you get Medicare drug coverage.

What if I get both Medicare & Medicaid?

What if I need help with drug costs?

If you have limited income and resources, you may qualify for Extra Help, even if you have creditable retiree drug coverage. If you qualify for Extra Help, your drug costs through Medicare may be lower than what you pay with your retiree coverage. Contact your benefits administrator before making any decisions. Who qualifies for Extra Help?

I have retiree coverage. Should I also get supplemental insurance?

Since Medicare pays first after you retire, your retiree coverage is probably similar to coverage from a Medicare Supplement Insurance (Medigap) policy. Both are likely to offer benefits that fill in some of the gaps in Medicare coverage—like coinsurance and deductibles.

If you don’t buy a Medigap policy within 6 months of when you first get Part A and Part B, you may not be able to buy a policy later or you may pay more. Generally, you need Part A and Part B to buy a Medigap policy.

You may want to contact your State Health Insurance Assistance Program (SHIP) for free advice about whether to buy a Medigap policy if you have retiree coverage. Visit shiphelp.org to get the contact information for your local SHIP.