• You can use your retiree benefits and Medicare together.
  • Having two health insurance plans might give you a broader range of covered healthcare services.
  • You may pay fewer out-of-pocket costs for Medicare if you keep your retiree benefits.

Planning for retirement includes figuring out your health insurance options. It can be a relief if your employer offers health insurance as a retiree benefit — but it can also mean a lot of information to consider.

You might not know how your retiree plan affects your ability to enroll in Medicare. The good news is that you don’t have to choose one or the other. You can enroll in Medicare and keep your retiree benefits. Plus, using both together can save you money and expand your coverage.

You might think you can’t have two health insurance plans at once, but that’s not the case. Medicare can work alongside other health insurance plans, including retiree health benefits.

So, if your employer offers health insurance as a retiree benefit, you can choose to accept it and still enroll in Medicare. In fact, some employers require you to enroll in original Medicare (parts A and B) to use their retiree health benefits.

In most cases, Medicare will act as the primary payer. This means your bill for services will be sent to Medicare first. Medicare will pay a portion of the cost. Then, the bill will be sent to your retiree health plan.

Your retiree health plan will be the secondary payer, meaning it will pay for costs that would have otherwise been billed to you. This includes costs like coinsurance, copayments, and deductibles.

Depending on the retiree plan that’s offered to you, you might also have coverage for services that Medicare doesn’t pay for.

What if you’re already on Medicare?

You can usually keep Medicare while accepting your retiree benefits. It’s a good idea to enroll in Medicare when you become eligible at age 65, even if you’re not yet ready to retire.

You can choose to only enroll in Part A (hospital insurance) or in both Part A and Part B (medical insurance). Some people delay enrolling in Part B while they’re still working and on company insurance.

If you choose to enroll in both parts A and B before retirement, you’ll pay the Part B premium along with the premium for your employer’s insurance plan. In 2021, the Part B premium is $148.50. Most people receive Part A without a premium.

While you’re still working, your employer health plan will be the primary payer and Medicare will be the secondary payer, picking up the remaining costs. After your retirement, Medicare will become the primary payer.

The amount you pay for Medicare won’t change. But keep in mind that you might have to pay a different premium for your retirement benefits than you were paying before retirement.

If you’re already enrolled in Medicare Part B when you retire, you typically don’t need to make any changes to your coverage. If you’re not, you’ll need to enroll in Part B once you retire.

Medicare considers retirement a qualified event for special enrollment. This means that you can make a change to your coverage even if it’s not currently a Medicare enrollment period.

What if you’re not already on Medicare?

If you retire before you reach age 65, you might already be using your retiree benefits before you become eligible for Medicare.

Some retiree health plans will require you to enroll in Medicare once you reach age 65 and take Part A and Part B coverage, but this is not the case with all plans. Your employer’s benefits department or health plan should let you know well in advance if this is required.

Once you do enroll in Medicare, it will become your primary payer. If you choose to keep your retiree benefits, they’ll become your secondary payer.

Not all employers offer retiree benefits as part of their benefits package, but many do. A study by the Kaiser Family Foundation found that in 2018, retiree benefits were offered by:

  • 49 percent of large public firms
  • 21 percent of large private nonprofit firms
  • 10 percent of large private for-profit firms

You might also have benefits from working for the federal government or serving in the armed forces. The rules for how Medicare works with each type of benefit can vary.

Veterans benefits

These benefits work with Medicare in a different way than other retiree benefits. Veterans and their families are eligible for a health insurance program called TRICARE.

To keep using TRICARE once you’re eligible for Medicare, you’ll be required to sign up for original Medicare. Unlike most other insurance plans and Medicare, TRICARE and Medicare don’t have a standard primary and secondary payer relationship.

Instead, the services you receive at Veterans Administration healthcare providers will be covered by your veterans’ benefits, while the services you receive at other facilities will be covered by Medicare. Any services you receive that aren’t covered by Medicare will be picked up by TRICARE.

Federal Employee Health Benefits

Employees of the federal government and their families are eligible for Federal Employee Health Benefit (FEHB) plans. You can keep your FEHB plan after you retire as long as you meet set conditions.

Generally, this includes being eligible to retire and having worked for a certain number of years with your federal employer. Once you retire, Medicare will be the primary payer and your FEHB plan will be the secondary payer.

FEHB plans don’t require you to enroll in Part B. You could choose to enroll in only Part A. This would give you additional coverage for hospital stays and in-hospital long-term care without an extra premium. If you do choose to enroll in Part B, you’ll pay the Part B premium along with the premium for your FEHB plan.

Your costs will depend on your specific FEHB plan, but most plans cover more than original Medicare.

Employee-sponsored retiree benefits

Your employer might offer you retiree benefits in a couple of different ways.

One option is to allow you to keep using the health plan you had while you were employed. Depending on your employer’s rules, you might have to sign up for Medicare parts A and B to stay on your plan.

Your premium might change once you retire. Your employer’s human resources department should tell you what to expect from your plan after retirement. Medicare will be the primary payer, and your employer-sponsored plan will be secondary.

Another option some employers offer is a sponsored Medicare Advantage (Part C) or Medigap policy. These aren’t separate plans, but they can make your Medicare benefits more affordable.

Having an employer-sponsored plan can lower your premiums and out-of-pocket costs. But it could also limit your options. Rather than comparing and choosing from among all Medicare Advantage or Medigap plans in your area, you’ll need to sign up for the one that your employer participates in.


COBRA is a law that allows you and your family to stay on your former employer’s health plan even if you’re no longer employed. Unlike other retirement benefits, COBRA isn’t permanent. You can stay on COBRA for 18 to 36 months.

You can use COBRA and Medicare together if you’ve already enrolled in Medicare before your COBRA coverage begins. In this case, Medicare will be the primary payer and your COBRA plan will be the secondary payer.

If you become eligible for Medicare during COBRA coverage, your COBRA benefits will end.

Other plan types

You might have retiree benefits from another source, such as union membership. In this case, your plan will most likely fall under the same rules as employer-sponsored benefits. Medicare will be the secondary payer and your plan will pick up some of the additional costs.

Things to consider when deciding to use Medicare, retiree benefits, or both
  • Is there a premium for my retirement plan?
  • Does my retirement plan offer prescription drug coverage?
  • Do I qualify for premium-free Part A?
  • Do I qualify for the standard Part B premium?
  • Which Medicare Advantage plans are available in my area?

Each part of Medicare interacts with retiree benefits in its own way. Medicare parts cover different services and have their own rules and fees.

Part A

Most people choose to enroll in Part A along with their retiree benefits, even if they don’t sign up for Part B. One reason for this is cost.

Part A is premium-free for most people. This means you can get additional coverage for hospital stays or nursing facility stays at no cost to you.

Not everyone receives Part A for free. You need to have accumulated enough Social Security work credits to qualify. Credits are earned at a rate of 4 per year, and you’ll need 40 to retire. Though you’ll often have more than enough credits to qualify by the time you retire, this isn’t always the case.

For example, if you moved to the United States later in your working life, you might not have enough credits and will need to pay a premium for Part A. In this case, it might save you money to not enroll in Medicare at all and just use your retiree benefits.

If you do choose to enroll in Part A, Medicare will be the primary payer for any hospital stay.

Part B

Part B is medical insurance. Most people pay the standard premium for Part B, but you’ll pay more if your individual income is over $88,000. You’ll pay your Part B premium in addition to any premium associated with your retiree benefit plan.

Part B will be your primary payer. Medicare pays 80 percent of the Medicare-approved amount for most services. Your retiree benefits will be the secondary payer, so they’ll pay the remaining 20 percent. They’ll also likely pay for services that Medicare doesn’t cover.

Keep in mind that paying two premiums doesn’t make sense for everyone. Depending on your budget and healthcare needs, you might need only your retiree benefits or only original Medicare.

You can compare what your retiree plan covers with Medicare coverage to help figure out what’s best for you. It’s your choice to keep your retiree benefits, use Medicare, or use both together.

Part C (Medicare Advantage)

You don’t normally need a retiree plan along with a Medicare Advantage plan. Part C plans are offered by private companies that contract with Medicare and are required to provide the same coverage as Medicare.

Generally, Advantage plans offer coverage for services that Medicare doesn’t pay for, such as dental care, vision screenings, and hearing services. They also have different premiums, deductibles, copayments, and other costs.

The Advantage plans available to you will depend on your state. You can shop for plans on the Medicare website and see if any fit your budget and healthcare needs. If you find a plan that offers coverage, meets your needs, and is more affordable, you can choose to purchase it and drop your retiree benefits.

Part D

Part D is prescription drug coverage. Original Medicare doesn’t offer coverage for prescriptions, so many people choose to purchase an additional Part D plan.

Using your retiree benefits along with Medicare can eliminate the need for a Part D plan. Most retiree health plans offer coverage for prescriptions. This means you can use your retiree plan with original Medicare and get coverage for your prescriptions without having to purchase a Part D plan.

Medicare supplement (Medigap)

Medigap, also known as Medicare supplement insurance, is an additional plan that picks up some of the out-of-pocket costs of original Medicare. You can choose from among 10 different Medigap plans. Each one covers a different combination of coinsurances, deductibles, and other fees.

Medigap plans do have premiums associated with them. Plans will vary in cost depending on your state and the plan you choose. It’s probably not necessary to have a Medigap plan and retiree benefits together. Your retiree benefits will act as a secondary payer and pick up many of the same costs a Medigap plan would.

  • You can use your retiree benefits and Medicare together to get even more coverage.
  • Medicare will be your primary payer, and your retirement benefits will be secondary. This means you’ll have fewer out-of-pocket costs to worry about.
  • In most cases, it’s up to you whether you choose to enroll in Medicare along with your retiree benefits; however, some employers and programs require that you enroll in original Medicare to use your benefits.
  • The best solution for you will depend on your budget and healthcare needs.

This article was updated on November 20, 2020, to reflect 2021 Medicare information.