What Employees Turning 65 Should Know When Working for a Company with Fewer Than 20 Employees

Turning 65 is a pivotal moment, especially if you work for a small company with fewer than 20 employees. Unlike larger firms, small employers face fewer federal mandates under laws like the Affordable Care Act (ACA) or Age Discrimination in Employment Act (ADEA). This means no guaranteed health insurance or job protections based on age, leaving you to navigate coverage and career decisions carefully. Whether you’re staying on the job or eyeing retirement, here’s what you need to know to secure your health and finances, including critical details if you skip Medicare Part B.

Build Your Health Coverage with Medicare Medicare is the federal health insurance program for those 65 and older, and it’s typically your cornerstone at this age. Since small employers (under 50 employees) aren’t required by the ACA to offer group health plans, Medicare often becomes your primary coverage. Here’s the breakdown:

- Part A (Hospital Insurance): Covers hospital stays, skilled nursing facilities, and some home health care. It’s free for most if you’ve worked 10 years in Medicare-taxed jobs (40 quarters), which applies to nearly all Americans.

- Part B (Medical Insurance): Covers doctor visits, outpatient services, and medical equipment. The standard premium in 2025 is $174.70 monthly, but it rises if your income exceeds $103,000 (single) or $206,000 (joint).

Enrollment:

- Initial Enrollment Period (IEP): Spans three months before to three months after your 65th birthday. Sign up via Social Security (ssa.gov or 1-800-772-1213). Enroll early for Part B coverage to start on your birthday month; late signups delay coverage and may incur penalties.

- Special Enrollment Period (SEP): If you’re working with active group health coverage (from your or your spouse’s employer), you can delay Part B without penalty. Enroll in Parts A and B within eight months after employment or coverage ends, using Form CMS-L564 and CMS-40B (available at ssa.gov).

What If You Don’t Have Medicare Part B?  

If you skip Part B during your IEP, assuming you’ll rely solely on your employer’s group health plan (fewer than 20 employees), and that plan is your only coverage at the time of service, here’s what happens:

- Primary Coverage: The group health plan becomes your primary payer, as Medicare isn’t active without Part B enrollment. This means your employer’s plan covers hospital stays, doctor visits, and other services first, subject to its terms (e.g., copays, network limits).

Risks and Gaps:

  - Limited Coverage: Small group plans often have higher costs or narrower networks than Medicare. Without Part B, you lose Medicare’s broader outpatient coverage (e.g., doctor visits, diagnostics), risking high out-of-pocket expenses if the group plan’s benefits are thin.

  - No Secondary Support: If enrolled in Part A only, it might cover hospital stays as secondary (after the group plan), but outpatient services (e.g., MRIs, therapy) fall entirely on the group plan or you, as Part A doesn’t cover them.

  - Penalty Risk: Delaying Part B past your IEP without qualifying group coverage (e.g., if the plan lapses) triggers a lifelong 10% premium penalty per year delayed, added to the $174.70 base in 2025. Re-enrollment is limited to the General Enrollment Period (January 1–March 31), with coverage starting July 1, leaving potential gaps.

- Who Pays Primary?: The group health plan is primary, paying first for all covered services (inpatient and outpatient). You or supplemental insurance (if any) cover remaining costs (e.g., deductibles, copays). Without Part B, there’s no Medicare coordination, so you depend fully on the group plan’s adequacy.

- Why Enroll in Part B?: Even with group coverage, Part B is critical. For small employers, Medicare is primary when enrolled, and the group plan becomes secondary, reducing your costs (e.g., group plan covers Medicare’s 20% coinsurance). Without Part B, a weak group plan could leave you with thousands in bills for outpatient care.

Take Action: Enroll in Parts A and B during your IEP unless you’re certain the group plan is robust and stable. If working with group coverage, use the SEP later, but don’t skip Part B indefinitely—gaps are costly.

Strengthen Your Medicare Plan

Medicare Parts A and B cover about 80% of approved costs, so add-ons are key to avoid financial strain:

- Part D (Prescription Drug Coverage): Covers medications, costing $30–$100 monthly in North Carolina (2025 averages). Enroll during your IEP or SEP to avoid a penalty (1% of the national base premium per month delayed, lifelong). Compare plans at medicare.gov/plan-compare.

- Medigap: Private policies that cover Medicare gaps like copays, coinsurance, and deductibles. Costs vary ($50–$300/month), but buying within six months of Part B enrollment ensures guaranteed issue (no health underwriting). Contact a licensed agent for quotes, 

Employer Group Plan Coordination:

- With Part B: For employers with fewer than 20 employees, Medicare is primary if you’re enrolled in Parts A and B. The group plan is secondary, covering costs Medicare doesn’t (e.g., coinsurance, some non-covered services). Ask your HR about coordination—some plans pair well, saving you money over dropping coverage.

- Without Part B: If you only have the group plan (no Part B), it’s your sole coverage, as detailed above. This can work if the plan’s strong (e.g., low copays, wide network), but many small group plans skimp on outpatient benefits, leaving you exposed. Compare premiums (group plan vs. $174.70 for Part B) and coverage depth. Dropping the group plan for Medicare + Medigap may be cheaper if employer contributions are low.

Take Action: If you keep the group plan without Part B, verify its outpatient coverage (e.g., doctor visits, tests). Most employees benefit from enrolling in Part B to make Medicare primary, with the group plan as backup. Call us at HealthPlans of NC.

Plan Your Career and Finances

Small employers aren’t bound by the ADEA, meaning they could set retirement ages or cut positions without age-based protections. This impacts your health coverage if the group plan is your only insurance.

- Job Security: Meet with your employer to discuss your role long-term. Highlight your experience to secure your spot, especially if relying on their group plan without Part B.

- Group Plan Risks: If you lose your job or the employer drops the plan (common in small firms), you’re uninsured without Part B until you enroll (via SEP or General Enrollment). COBRA may extend group coverage (18–36 months), but premiums are high (e.g., $500–$1,000/month), and it’s not guaranteed for small firms. Enrolling in Part B during your IEP avoids this gap.

Social Security:

- You’re at or near full retirement age (66–67, depending on birth year, e.g., 66 years 10 months for 1959 births). Claim benefits now for steady income (e.g., $1,500–$3,000/month, per SSA 2025 estimates) or delay to age 70 for an 8% annual increase (e.g., $2,000 to $2,960 at 70). Working past full retirement age doesn’t reduce benefits, so you can earn freely.

Take Action: If skipping Part B, confirm your job and group plan stability. Apply for Part B if risks emerge (SEP covers you). Estimate Social Security at ssa.gov/myaccount to plan cash flow.

Take Charge at 65

Don’t wait—turning 65 demands action to protect your health and wallet:

- Enroll in Medicare: Sign up for Parts A and B during your IEP (ssa.gov or 1-800-772-1213). If working with group coverage, consider Part B to make Medicare primary, reducing costs. Without Part B, your group plan is primary and sole coverage, risking gaps if it’s weak or lost.

- Add Coverage: Get Part D for drugs and explore Medigap for gaps. Compare with your group plan—Medicare may save money.

- Secure Your Job: Discuss your future with your employer to maintain group coverage if delaying Part B.

- Plan Finances: Decide on Social Security timing and budget for premiums (e.g., $174.70 for Part B, $30–$100 for Part D).

Why Act Now?  

Without Part B, a small employer’s group plan is your only shield, and any lapse (job loss, plan cuts) leaves you exposed. Medicare’s reliability ensures peace of mind.