Retiring right requires a lot of planning. Health insurance coverage is one of the critical decisions that must be made as we approach retirement.

Considering that full Social Security benefits are not paid until age 66 to 67 (depending on when you were born), many people continue to work past age 65. In fact, about half the US population work past age 65. In doing so, they are faced with an important decision; keep their employer coverage or switch to Medicare coverage at age 65? To make a good decision, one must first compare the cost and benefits of Medicare vs. employer insurance.  That is what this article will help you do.

Of course, most a very comfortable with their employer health benefits and have no idea that Medicare can be a lower cost and better insurance coverage than employer health plans.

This article, and the accompanying calculator will help you determine which is a better value for you, your employer health benefits or Medicare.

Short Summary

  • Evaluate Medicare vs. employer insurance based on premiums, deductibles, copays, network restrictions & benefits.

  • Understand the 3 types of Medicare coverage: Original Medicare plus supplemental coverage , Medicare Advantage Plans and Part D Prescription Drug Coverage.

  • Consider factors such as cost of spousal coverage, prescription drug costs, HSA plans, networks and possible changes in coverage over time.

Compare Employer vs Medicare Calculator

Part B Deductible:
Part A Deductible:

Plan G-HD deductible:

Part B Premium:

Group Plan

Copay per visit:


Annual Maximum Limit:

Monthly Premium
Employer Plan:

Medigap Plan G:

Medigap Plan N:

Medigap Plan G-HD:

Assuming $10,000 Total Medical Bill in one Calendar Year
Group Plan
Medigap Plan G
Medigap Plan N
Medigap Plan G-HD
Group Plan
Medigap Plan G
Medigap Plan N
Medigap Plan G-HD
Group Plan
Medigap Plan G
Medigap Plan N
Medigap Plan G-HD
Group Plan
Medigap Plan G
Medigap Plan N
Medigap Plan G-HD
Out of Pocket Medical Cost
Employer Plan
Medicare + Plan G
Medicare + Plan N
Medicare + Plan G-HD
Total Annual Premium
Employer Advantage Plan
Employer Regular Plan
Medicare + Plan G
Medicare + Plan N
Medicare + Plan G-HD

Evaluating Employer Health Insurance vs. Medicare

The first difference between Medicare and your employer coverage you will need to understand is that Medicare is entirely individual coverage. There is no family plan. However, spousal Medicare benefits can be determined by either their personal or your work history.

Step One

This means that if you have a spouse and you sign up for Medicare, you may need to consider the cost of health insurance coverage for your spouse. Is your spouse eligible for Medicare coverage? If so, you and your spouse will need to pay Medicare premiums for Part B and a Medicare supplement plan. If not, you will need to consider the cost of separate insurance until your spouse becomes eligible for Medicare.

If the cost of your spouse’s separate insurance is too high, it may be in your best interest to delay Medicare enrollment and stay with your group health plan.

Step Two

Understand how Medicare works and when a person can enroll.

Our website is structured to help you quickly learn what you need to know about Medicare coverage and costs. You can quickly learn what you need to know about Medicare health care coverage, Medicare eligibility, when to enroll in Medicare, late enrollment penalties and everything you need in order to make an informed decision and compare Medicare to employer sponsored coverage. By watching our videos and or reading our articles in our New to Medicare series, you will be ready to decide between Medicare plans and employer coverage. In addition, I have provided information below for your research.

Of course, you can also schedule a telephone meeting with one of our Medicare experts. We can help increase your learning speed and save you a considerable amount of time.

If your Part A is already paid for through your or your spouses payroll taxes, you can sign up for Medicare Part A at any time. It cost noting and adds to your employer coverage. When you enroll in just Medicare Part A, your group health plan employer coverage is the primary payer, Medicare Part A is your secondary payer.

Step Three

Are you or your spouse on prescription medication? The cost of prescription medications is separate from the cost of Medicare and a supplement. Sometimes the cost of prescription medication is less on Medicare than with employer coverage, sometimes it is more.

We advise our clients to use the PartDShopper website to determine exactly what their prescription coverage would cost on Medicare. I created this Part S site to help our clients choose a prescription drug plan or re-shop their prescription coverage annually.

Step Four

You will want to know what Medicare supplement options are available to you and what they cost.

For the cost of Medicare, you will need to pay a monthly premium for Medicare Part B and Part D. The Part D premium is found in step three above. The Part B premium changes every calendar year and can be found here:

If your retirement income will be higher than average, you will want to understand IRMAA. People subject to IRMAA pay more for their Part B and Part D premiums.

You also want to be sure you understand the definitions of these common insurance terms:


The amount in medical bills you will need to pay before your insurance plan pays any benefit.


A dollar amount you pay when you have a specific service or procedure. I.E. per primary care office visit, specialist office visit, per prescription and so on.


A percentage of the bill you pay after meeting your deductible. For example, many employer plans have an 80/20 coinsurance. After you meet the deductible you pay 20% of the medical bill and the insurance company pays 80%. Medicare without a supplement is 80/20. With a supplement is 100/0.

Annual Maximum Limit

An employer group health plan and Medicare Advantage Plan both have a maximum limit the consumer will be liable for. That limit is typically reset every calendar year. No matter how much your medical bills amount to, you would pay no more than the maximum limit during any calendar year.

Step Five – Using the Employer Coverage vs. Medicare Coverage Calculator.

Armed with the above knowledge and numbers, you are now ready to compare Medicare to your employer coverage. The Medicare vs. Employer Coverage calculator will help you determine which is a better value for you. We strongly advise that as you go through this process, or directly after, you speak with one of our Medicare expert advisors who can answer your questions and provide a “Pros vs. Cons” insight to help you make an informed decision.

To use the calculator you will need to manually input information found on our Resources page for Medicare Part A & Part B + IRMAA.

  1. Input the Medicare Part B deductible

  2. Input the Medicare Part A Deductible

  3. Input the Medigap Plan G-HD Deductible

  4. Input the monthly Medicare Part B premium

  5. Regarding Your Employer Plan

  6. Input your employer plan deductible

  7. Input your office visit copay. (the calculator assumes six office visits annually)

  8. input your employer plan coinsurance, if any

  9. input your Employer Plan Annual Maximum Limit.

Monthly Premiums

The three most commonly purchased Medicare supplement plans are Plan G, Plan N and Plan G-HD (high deductible). Together these three supplements make up over 90% of all Medicare supplement plans purchased. We will supply you with the Medigap Plan premiums and our recommendations free of cost or obligation.

In the third column input your:

  1. Employer Plan Monthly Premium

  2. Medigap Plan G monthly premium

  3. Medigap Plan N monthly premium

  4. Medigap Plan G-HD monthly premium.

With all of the above plugged into the calculator, your will have two rows of calculated information.

Out of Pocket Medical Costs.

The first row of output is Out of Pocket Medical Costs. This is our estimate of what you will be liable for in any given year where you have $10,000 in medical expenses. You will typically find having either Medigap Plan G or Medigap Plan N will result in the lowest out of pocket costs.

Total Annual Premiums

The total annual premiums row illustrates your estimated annual premiums for your employer plan, employer advantage plan or any of the three Medicare supplement plans.

The annual premiums for the Advantage plans and supplement plans include the required monthly Medicare part B premium.

** Neither the costs or premium sections include the Medicare Part prescription drug premium or total drug costs. You can manually add that information

Armed with the data, the calculations can help you better understand the costs vs benefits comparison of Medicare vs. Employer coverage.

Medicare Coverage Breakdown

Medicare is a government health care program that provides health coverage to people age 65 or older, as well as younger people with disabilities, end-stage renal disease (ESRD), or Lou Gehrig’s disease (ALS). Medicare is administered by the Centers for Medicare & Medicaid Services (CMS), a government agency.

Medicare includes Part A hospital insurance, which covers inpatient services. Medicare Part B covers doctor visits and other outpatient services. Both Medicare Part A and Part B combined is referred to as Original Medicare.

Medicare Part D is for prescription drugs you may pick up at a pharmacy or via mail order.

For most of us, Medicare Part A is premium free because it was paid for by Medicare taxes deducted from payroll. If you or your spouse paid Medicare taxes for at least ten years, your Medicare Part A hospital insurance is paid for.

To be eligible for Medicare, you must be 65 or older and a U.S. citizen or permanent resident for at least five years in order to qualify for Medicare coverage. Or, under 65 and on Social Security Disability Income for 24 consecutive months.

That’s the high level view of Medicare, but we have plenty of articles you can explore that answer any Medicare questions you have in more depth. For instance, if you want to know more about Medicare Part A and Part B coverage or the costs associated with Medicare.

Medicare Advantage Plans

A Medicare Advantage Plan will replace your Original Medicare with similar insurance coverage managed by a private insurance company. When you have an advantage plan, you must still pay your Part B premium, but all coverage decisions are made by the for-profit insurance company managing your plan.

A few highlights of Medicare Advantage Plan feature include:

  • All costs and benefits can change annually. Just like your group health plan, long-term planning is made more difficult because of the annual change in benefits and costs.

  • You are limited to a network of doctors and hospitals. The medical provider must have a contract with your specific plan in order to provide in-network services.

  • Your medical provider must seek prior authorization from the insurance company prior to providing non-urgent services or procedures.

  • The Advantage plan is required to offer coverage in all the same benefit categories as Original Medicare, but not the same benefits. Advantage plans do not have the exact same benefits as Original Medicare.

  • Some Employer Sponsored Insurance Plans for retirees are actually Medicare Advantage Plans retiree insurance. If your employer group health plan coverage requires you purchase Medicare Part B, then your plan is likely an Advantage plan.

  • Most Advantage Plans come with bundled Part D coverage that is not included in your maximum out of pocket limit.

Prescription Drug Coverage

Medicare’s Part D prescription drug coverage is designed for those prescriptions you would pick up at a pharmacy or mail order and self administer.

Medicare Part B also includes drug coverage for prescriptions administered by a medical professional in a medical setting. Also, Part A includes drug coverage for all medications administered while an inpatient in a medical facility.

Delaying Medicare With Creditable Coverage


If you are 65 or older, actively working and your employer has at least 20 employees, your employer sponsored insurance is considered creditable coverage by Medicare.

If you are under 65 and actively working and qualify for Medicare through disability, your employer must have at least 100 employees to be considered creditable.

What is Creditable Coverage for Medicare?

Creditable coverage for Medicare is simply health insurance that Medicare deems roughly equal in benefits to Original Medicare (both Medicare Part A and Part B) or Part D. When you have creditable coverage, you can delay your enrollment in Medicare indefinitely without a late enrollment penalty.

If you are outside of your Initial Enrollment Period and used creditable coverage to delay enrolling in Medicare, you can create your own Special Enrollment Period to enroll in Medicare without a late enrollment penalty. When you are ready to enroll in Medicare, simply have your employer complete and sign form CMS-L564 attesting to the fact that you had creditable coverage since turning 65 and are not subject to a penalty. This way Medicare will not impose a late enrollment penalty.

When you are ready to sign up for Medicare, enroll in Medicare Part B (and Part A if not already enrolled) through the Social Security website. Make certain you cancel your employer’s health plan so your employer coverage ends as your Medicare and supplement starts.

Choosing a Medigap Policy

You will want to understand the benefits and cost of the different Medicare supplement plans available to you before making a decision between your employer’s group health coverage and Medicare. We strongly advise a person first research their Medicare supplemental coverage options. Only if Medicare supplement plans (aka Medigap plans) cannot fit into your budget should you then research your Medicare Advantage plan choices.

Benefits of Medigap Plans

Medicare supplement plans allow you to keep the most important benefits of Original Medicare, the benefits you lose when you convert your Original Medicare health coverage to an Advantage Plan.

These benefits are:

  1. You can see any doctor or visit any hospital in the U.S. or U.S. territory who accepts Original Medicare. You have no network limitations. This means that if there is a doctor half way across the country who specializes in curing your ailment, you can see them. Medicare and your supplement will pay the medical bills as promised.

  2. In addition, there is no insurance company between you and your medical decisions. Your doctors are not required to get prior authorization. No insurance company can delay or deny your coverage. Your healthcare decisions are between you and your doctor.

Choosing An Independent Medicare Insurance Broker

Medicare Advisor Near MeAn insurance agent or agency that specializes in Medicare can help you make an informed decision with confidence. Deciding between employer insurance and Medicare is not always easy.

Medicare is complicated and insurance agents are not trained on Medicare when they get their license. Don’t settle on a local life insurance agent who also sells Medicare. What they don’t know can be your downfall.

Medigap Seminars Insurance Agency is one of the most successful and respected Medicare specialists in the country. We work in every state except Massachusetts’s and are always just a phone call away.

We also offer Medicare Advocate services to our clients.

Frequently Asked Questions

Is it a good idea to get Medicare if you re still working at 65?

For most people, Medicare plus a supplement will offer greater insurance coverage at a lower cost than employer insurance. In fact, Original Medicare plus a supplement is considered the best medical insurance you can get in the United States. Most health care providers recommend Original Medicare over other health insurance.

How to compare Medicare drug plans?

The best way to compare Medicare Part D prescription drug plans is to use a tool like the one we provide on our Part D shopper website.

Remember, you can change Part D plans every year. Choose the lowest total cost plan for the prescriptions you are currently taking.

Is Medicare the same as work insurance?

Medicare and employer group health insurance plans are two distinct types of coverage. Those meeting the set age or disability criteria can benefit from Medicare, while work insurance is typically provided by employers for their employees. Neither replaces the other. Both remain different forms of health insurance coverage.

How do you determine what to compare between health plans?

This is a great question. Way too many people get stuck trying to run hypothetical situations in their mind to see what it will cost for this procedure or that. This approach is not necessary and counter productive.

Instead, we advise looking at what it will cost you if you had a $10,000 medical bill. That is what the above calculator accomplishes for you. In addition, look at your maximum out of pocket liability. The health insurance plan with the lowest maximum out of pocket costs, is the plan with the most coverage.

Lastly, look at the plan limitations. Is there a network? Can benefits change? Are medical expenses controlled by an insurance company?

What are the key differences between Medicare and employer health insurance?

Original Medicare plus a supplement offers Medicare beneficiaries insurance coverage with benefits that never change. That makes planning for retirement easier.

Join our Free 6-Day Medicare Mini Course

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