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Comparing Medicare to Work Insurance and Retiree Coverage

Bill O'Hara

Licensed Life and Health Insurance Broker

Written 4/17/2024

When Do I Have To Take Medicare?

Intro | Should I Take Medicare Now?

|How To Signup For Medicare | Medicare Secondary Options |

I'm Turning 65 But My Spouse Is Not |

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  • Choosing between Medicare and Work Insurance or Retiree Coverage can be challenging.

  • Factors to consider include who you need to cover, what your coverage looks like, and how much each option costs.

  • The most significant costs to consider are monthly premiums and each plan's yearly out-of-pocket max.

  • Work with a broker to get an unbiased opinion and compare all your options.

As you approach Medicare eligibility, you often have many options for your healthcare. You can make Medicare your primary insurance, use creditable employer coverage from where you work, or potentially use a retiree plan. Deciding what option is best can feel overwhelming.

We have helped thousands of people with this decision over the years, and in this article, we will discuss the things you should consider as you approach Medicare eligibility.

3 Types of Insurance:

Let’s give some quick definitions for these three options.


Medicare is a federal program that provides health insurance to people over 65 or people under 65 on disability status.

Creditable Employer Coverage is health insurance you receive while currently working. Creditable means an actuary has evaluated it and it has been determined to be as good or better than Medicare coverage.

Retiree Coverage is health insurance provided to people who have worked for a company or union long enough to receive benefits even after retirement. If you retire before 65 you may receive a retiree “bridge plan” that will hold you over until you are Medicare eligible.

Who Are You Covering?

As you approach Medicare eligibility, you must first decide how many people their health insurance covers. If your spouse and you are Medicare eligible, it can make sense to go onto Medicare. If your spouse is younger or you have children needing more coverage, keeping your work insurance a bit longer may make sense. It could also make sense to have your spouse and you move to Medicare and have your child get marketplace insurance. If you are alone and have no creditable coverage options, Medicare can be a no-brainer.

Figure out who you must cover and then decide which of your options best fits the situation.

Coverage Goals

After you know who you must cover, compare your options based on the coverage you need. Which options cover most of your doctors and have the most extensive networks? Which policies cover your prescriptions the best? Does your current insurance require constant referrals and authorizations?

When it comes to coverage, Original Medicare has an incredibly robust network of doctors and hospitals—about 95% of doctors across the country. There is also little pushback from Original Medicare for Hospital and Medical procedures. You can also get secondary plans that can help cover out-of-pocket costs or add in benefits Original Medicare doesn’t cover like dental and vision.

Monthly Premiums

Once we’ve compared coverage, we can then compare costs. We will start with your monthly premiums.

Monthly premiums vary highly depending on your plan. Some work and retiree plans have monthly premiums of around $100 a month, and some employees have to pay over a thousand monthly for their coverage. Your spouse may also have to pay more than you for coverage under your plan. More on this later.

Medicare Part B has a monthly base rate of $174.70 per person. Still, you often have to add secondary plans like Medicare Supplements, Medicare Advantage plans, or Medicare prescription plans, which could also raise costs. These additional costs vary greatly depending on your zip code and state.

One of the main issues people encounter while working is that Medicare Part B’s monthly premium can be higher if they are in certain income brackets. When approaching Medicare eligibility, you could be in your highest earning years, potentially raising your premium from $174.70 per person to $349.40 or $594 per person. This is rare but something to consider if you are a higher earner.

We must also factor each person's cost under a work insurance plan. We tend to find that the spouse not working for the company providing benefits has a higher monthly cost than the person who does. For example, imagine a couple with a monthly health insurance cost of $600 from their employer coverage. The person who works for the company may pay $100 a month, while the spouse who was added to the policy pays $500 a month. In this instance, we may want the first spouse to stay on their work insurance while the second spouse goes on Medicare to save money.

Again, all of this is relative to your situation. In some cases, Medicare is a no-brainer because you save hundreds each month by switching from work or retiree coverage. In other cases, your work insurance has a lower monthly premium, and it makes the most sense going forward.

If you are feeling overwhelmed, you are not alone! Don't hesitate to reach out if you want a complete comparison of your options.

Maximum Out-of-Pocket Costs

We have saved the best for last. The most crucial factor to consider is your maximum out-of-pocket costs for the year. You calculate this by adding up all your premiums and calculating what you would pay if you maxed out your coverage for the year.

Almost every health insurance plan has deductibles, copays, coinsurance, and other out-of-pocket costs. But the plan will tell you before signing up what the maximum amount of total costs you can accrue is before they start picking up 100% of the bills going forward. This number could be $1000, $5000, $10,000, or even more. It varies greatly depending on the plan.

When comparing options, we always want to see what happens in the worst-case scenario. What will happen if you have your worst year health-wise? We don’t get insurance for when everything is smooth sailing. We get it to protect ourselves from as many situations as possible.

In some situations, Medicare could cost slightly more monthly than your work insurance but have a lower total out-of-pocket if something goes wrong. In this case, the extra premium could be worth it if you anticipate having many medical bills. You could also have work insurance or retiree coverage with an incredibly low out-of-pocket max. In this example, work insurance or retiree coverage could be your best option if something catastrophic happens.  

Bringing It All Together

Choosing between Medicare and work insurance when turning 65 can be a big and confusing decision. There is no one-size-fits-all solution, but you can follow a few guidelines. Start by determining how many people need coverage and comparing which options have the best networks and benefits. After that, start comparing the costs of each option. The most important costs to consider are your monthly premiums and the maximum out-of-pocket cost of each plan if something goes wrong.

All of this can feel impossible to comprehend at times. But you can work with the brokers at NJ Life and Health to get an unbiased comparison of all your options and decide what is best for your family and you.

Reach out to us at or call our Toms River, NJ office at 848-226-6897. We are licensed in 24 different states and always happy to help!

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