Skip to main content
  • Foundation
  • Executive network
  • CEO Circle
  • Enterprise Solutions
  • Linkage Logo
  • Store
  • Sign In
  • Account
    • My Account
    • Logout
    • Global
    • India
    • MENA
SHRM
About
Book a Speaker
Join Today
Renew
Rejoin Now
Renew
  • Membership
  • Certification
    Certification

    Smiling asian student studying in library with laptop books doing online research for coursework, making notes for essay homework assignment, online education e-learning concept
    Get Certified!

    Be recognized as an HR leader with your SHRM-CP or SHRM-SCP credential.

    • How to Get Certified

      Demonstrate your ability to apply HR principles to real-life situations. No other HR certification compares.

      • How to Get Certified
      • Eligibility Criteria
      • Exam Details and Fees
      • SHRM-CP
      • SHRM-SCP
      • Which Certification is Best for Me
      • Certification FAQs
    • Prepare for the Exam

      Give yourself the best chance to pass your SHRM certification exam.

      • Exam Preparation
      • SHRM BASK
      • SHRM Learning System
      • Instructor-Led Learning
      • Self-Study
      • Study Aids & Add-ons
    • Recertification

      Recertify your SHRM Credentials before your end date!

      • Specialty Credentials
      • Qualifications
  • Topics & Tools
    Topics & Tools

    Stay up to date with workplace news and leverage our vast library of resources to streamline day-to-day HR tasks.

    The white house in washington, dc.
    Executive Order Impact Zone

    Do not abandon, but evaluate and evolve. It is about legal, equal opportunity for all.

    • News & Trends

      Follow breaking news and emerging workplace trends.

      Legal & Compliance

      Stay informed on workplace legal updates and their impacts.

      From the Workplace

      Explore diverse perspectives from your peers on today's workplaces.

      Flagships

      Get curated collections of podcasts, videos, articles, and more produced by SHRM.

    • HR Topics
      • AI in the Workplace
      • Civility at Work
      • Compensation & Benefits
      • Inclusion & Diversity
      • Talent Acquisition
      • Workplace Technology
      • Workplace Violence Prevention
      SEE ALL
      SHRM Research
    • Tools & Samples

      Access member resources and tools to streamline HR tasks.

      • Forms & Checklists
      • How-To Guides
      • Interactive Tools
      • Job Descriptions
      • Policies
      • Toolkits
      SEE ALL
      Ask an Advisor
  • Events & Education
    Events & Education

    SHRM25 in San Diego, June 29 - July 2, 2025
    Join us for SHRM25 in San Diego

    Register for the World’s Largest HR Conference being held on June 29 - July 2, 2025

    • Events
      • SHRM25
      • The AI+HI Project 2025
      • INCLUSION 2025
      • Talent 2026
      • Linkage Institute 2025
      SEE ALL
      Webinars
    • Educational Programs

      Designed and delivered by HR experts to empower you with the knowledge and tools you need to drive lasting change in the workplace.

      Specialty Credentials

      Demonstrate targeted competence and enhance credibility among peers and employers.

      Qualifications

      Gain a deeper understanding and develop critical skills.

    • Team Training & Development

      Customized training programs unique to your organization’s needs.

  • Business Solutions
  • Advocacy
    Advocacy

    Make your voice heard on public policy issues impacting the workplace.

    Advocacy
    SHRM's President & CEO testifies to Congress on "The State of American Education"
    • Policy Areas
      • Workforce Development
      • Workplace Inclusion
      • Workplace Flexibility & Leave
      • Workplace Governance
      • Workplace Health Care
      • Workplace Immigration
      State Affairs

      SHRM advances policy solutions in state legislatures nationwide.

      Global Policy

      SHRM is the go-to for global HR leaders and businesses on workplace matters.

    • Advocacy Team (A-Team)

      SHRM’s A-Team is a key member benefit, giving you the tools, insights, and opportunities to shape workplace policy and drive real impact.

      Take Action

      Urge lawmakers to support policies that create lasting, positive change.

      Advocacy & Legislative Resources

      Access SHRM’s curated policy materials and content.

    • SHRM-Led Coalitions
      • Generation Cares
      • The Section 127 Coalition
      • Learn More & Partner with SHRM Government Affairs
  • Community
    Community

    Woman raising hand in group
    Find a SHRM Chapter

    Easily find a local professional or student chapter in your area.

    • Chapters

      Find local connections from over 607 chapters and state councils and create your personalized HR network.

      SHRM Connect

      Post polls, get crowdsourced answers to your questions and network with other HR professionals online.

      SHRM Northern California

      Join SHRM members in the greater San Francisco Bay area for local events and networking.

    • Membership Councils

      Learn about SHRM's five regional councils and the Membership Advisory Council (MAC).

      • Membership Advisory Council
      • Regional Councils
    • Volunteers

      Learn about volunteer opportunities with SHRM.

      • Volunteer Leader Resource Center
Close
  • Membership
  • Certification
    back
    Certification
    Smiling asian student studying in library with laptop books doing online research for coursework, making notes for essay homework assignment, online education e-learning concept
    Get Certified!

    Be recognized as an HR leader with your SHRM-CP or SHRM-SCP credential.

    • How to Get Certified

      Demonstrate your ability to apply HR principles to real-life situations. No other HR certification compares.

      • How to Get Certified
      • Eligibility Criteria
      • Exam Details and Fees
      • SHRM-CP
      • SHRM-SCP
      • Which Certification is Best for Me
      • Certification FAQs
    • Prepare for the Exam

      Give yourself the best chance to pass your SHRM certification exam.

      • Exam Preparation
      • SHRM BASK
      • SHRM Learning System
      • Instructor-Led Learning
      • Self-Study
      • Study Aids & Add-ons
    • Recertification

      Recertify your SHRM Credentials before your end date!

      • Specialty Credentials
      • Qualifications
  • Topics & Tools
    back
    Topics & Tools

    Stay up to date with workplace news and leverage our vast library of resources to streamline day-to-day HR tasks.

    The white house in washington, dc.
    Executive Order Impact Zone

    Do not abandon, but evaluate and evolve. It is about legal, equal opportunity for all.

    • News & Trends

      Follow breaking news and emerging workplace trends.

      Legal & Compliance

      Stay informed on workplace legal updates and their impacts.

      From the Workplace

      Explore diverse perspectives from your peers on today's workplaces.

      Flagships

      Get curated collections of podcasts, videos, articles, and more produced by SHRM.

    • HR Topics
      • AI in the Workplace
      • Civility at Work
      • Compensation & Benefits
      • Inclusion & Diversity
      • Talent Acquisition
      • Workplace Technology
      • Workplace Violence Prevention
      SEE ALL
      SHRM Research
    • Tools & Samples

      Access member resources and tools to streamline HR tasks.

      • Forms & Checklists
      • How-To Guides
      • Interactive Tools
      • Job Descriptions
      • Policies
      • Toolkits
      SEE ALL
      Ask an Advisor
  • Events & Education
    back
    Events & Education
    SHRM25 in San Diego, June 29 - July 2, 2025
    Join us for SHRM25 in San Diego

    Register for the World’s Largest HR Conference being held on June 29 - July 2, 2025

    • Events
      • SHRM25
      • The AI+HI Project 2025
      • INCLUSION 2025
      • Talent 2026
      • Linkage Institute 2025
      SEE ALL
      Webinars
    • Educational Programs

      Designed and delivered by HR experts to empower you with the knowledge and tools you need to drive lasting change in the workplace.

      Specialty Credentials

      Demonstrate targeted competence and enhance credibility among peers and employers.

      Qualifications

      Gain a deeper understanding and develop critical skills.

    • Team Training & Development

      Customized training programs unique to your organization’s needs.

  • Business Solutions
  • Advocacy
    back
    Advocacy

    Make your voice heard on public policy issues impacting the workplace.

    Advocacy
    SHRM's President & CEO testifies to Congress on "The State of American Education"
    • Policy Areas
      • Workforce Development
      • Workplace Inclusion
      • Workplace Flexibility & Leave
      • Workplace Governance
      • Workplace Health Care
      • Workplace Immigration
      State Affairs

      SHRM advances policy solutions in state legislatures nationwide.

      Global Policy

      SHRM is the go-to for global HR leaders and businesses on workplace matters.

    • Advocacy Team (A-Team)

      SHRM’s A-Team is a key member benefit, giving you the tools, insights, and opportunities to shape workplace policy and drive real impact.

      Take Action

      Urge lawmakers to support policies that create lasting, positive change.

      Advocacy & Legislative Resources

      Access SHRM’s curated policy materials and content.

    • SHRM-Led Coalitions
      • Generation Cares
      • The Section 127 Coalition
      • Learn More & Partner with SHRM Government Affairs
  • Community
    back
    Community
    Woman raising hand in group
    Find a SHRM Chapter

    Easily find a local professional or student chapter in your area.

    • Chapters

      Find local connections from over 607 chapters and state councils and create your personalized HR network.

      SHRM Connect

      Post polls, get crowdsourced answers to your questions and network with other HR professionals online.

      SHRM Northern California

      Join SHRM members in the greater San Francisco Bay area for local events and networking.

    • Membership Councils

      Learn about SHRM's five regional councils and the Membership Advisory Council (MAC).

      • Membership Advisory Council
      • Regional Councils
    • Volunteers

      Learn about volunteer opportunities with SHRM.

      • Volunteer Leader Resource Center
Join Today
Renew
Rejoin Now
Renew
  • Store
    • Global
    • India
    • MENA
  • About
  • Book a Speaker
  • Foundation
  • Executive network
  • CEO Circle
  • Enterprise Solutions
  • Linkage Logo
SHRM
Sign In
  • Account
    • My Account
    • Logout
Close

  1. Topics & Tools
  2. Workplace News & Trends
  3. Compensation & Benefits
  4. For Employees Approaching Retirement, Health Coverage Decisions Loom
Share
  • Linked In
  • Facebook
  • Twitter
  • Email

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vivamus convallis sem tellus, vitae egestas felis vestibule ut.


Error message details.

Copy button
Reuse Permissions

Request permission to republish or redistribute SHRM content and materials.


Learn More
News

For Employees Approaching Retirement, Health Coverage Decisions Loom

Part 4: Medicare rules and costs are a mystery to many, but don't overlook HSAs

November 4, 2019 | Stephen Miller, CEBS


More from This Series

PART 1
Easing into Retirement

Part 2
Targeted Benefits for Aging Workers

PART 3
Lifetime Income Prospects

Part 4
Preparing for Health Care in Retirement

Older workers face a number of decisions about health care coverage, such as whether to enroll in Medicare while still employed and if so, which parts. They should also plan for the coverage they'll need in retirement, both immediately after leaving work with COBRA as an option if they're not yet Medicare-eligible, and long-term to fill Medicare's gaps. And they should understand the role health savings accounts can—and can't—play.

Among Baby Boomers, "the biggest stress trigger around retirement is their ability to afford health care," said Meghan Murphy, vice president of thought leadership at Fidelity Investments, a benefits administrator, in Boston. A 65-year-old couple retiring in 2019 can expect to spend $285,000 in health care and medical expenses throughout retirement, she noted, while for single retirees, the health care cost estimate is $150,000 for women and $135,000 for men, based on Fidelity's research.

Below are key health coverage issues that confront aging workers and the options they'll face.

Medicare Basics

As reported earlier this year by SHRM Online, as employees become eligible to enroll in Medicare at age 65, there are several parts to Medicare with varying premiums that employees should keep in mind:

Part A covers hospital and other inpatient care, and most enrollees are not charged a monthly premium. Many employees who continue working will enroll in Part A unless they want to continue contributing to a health savings account (HSA), which is incompatible with any part of Medicare.

Part B covers doctor visits and outpatient exams and tests and charges a monthly premium.

Part C refers to Medicare Advantage plans sold by insurers. These plans charge monthly premiums and provide coverage compatible with Medicare but with different out-of-pocket costs and rules.

Part D covers prescription drug costs. These privately administered plans charge a monthly premium.

Employees may choose to wait until they stop working to enroll in Medicare. However, if they do so, they must be able to provide proof they had employer-sponsored coverage (or coverage through their spouse's employer), including prescription drug coverage at least equivalent to Medicare Part D's, or they will face higher Medicare premiums if they delay Medicare enrollment.

Enroll in Medicare or Not?

"From the employees' perspective, the question is whether they are better off with Medicare or their employer's plan, and that decision requires a facts-and-circumstances analysis," said Liliana Salazar, chief compliance officer for western region employee benefits at health insurance brokerage HUB International in Los Angeles.

When deciding which plan to choose, she advised, employees should consider what their employer plan covers, whether the plan is generous enough to cover the majority of their out-of-pocket expenses and if the plan exposes them to large out-of-pocket expenses.

Medicare premiums are usually deducted from Social Security benefits. However, if employees delay receiving Social Security payments after age 65 but still enroll in Medicare Part B, they would pay Part B premiums—and potentially Part D premiums—on an after-tax basis while receiving employer-sponsored coverage, she noted.

"The reality is that most employees turning 65 will stay enrolled in their employer's group health plan," Salazar said. "It's a known program, it's easily accessible, and Medicare is very complicated." Also, she explained, "Medicare secondary-payer rules prohibit employers from creating any incentives, monetary or otherwise, to encourage individuals to transition away from the employer-sponsored plan."

Older workers, however, may be too hasty in deciding not to shift to Medicare as a replacement for their employer's plan, said Tricia Blazier, director of health care insurance services at Allsup in Belleville, Ill. She gave these reasons why Medicare plans might be a better option for some employees:

  • Medicare premiums are relatively stable. For example, the standard Part B premium is currently $135.50, up only slightly from $134 in 2018, which was unchanged from 2017. Private insurance plan premiums, in contrast, have far outpaced inflation over the past decade.
  • Medicare has low deductibles—under $200 for most plans.
  • With employer plans, 66 percent of workers have a co-pay. With Medicare, out-of-pocket costs are lower and may be eliminated.
  • Medicare has significant cost savings if employees primarily use generic prescription medications, so it can pay to take a look at Part D plan options.
  • Medicare allows enrollees to personalize their health care coverage so they can ensure it addresses their needs, including in-network doctors, whereas "employers may provide a one-size-fits-all plan for their workforce," Blazier said.

While choosing Medicare over an employer's plan "may not be the right choice for everyone, it's certainly an option," she added.

State health insurance assistance programs, available in all 50 states, offer free Medicare enrollment counseling and assistance.

Medicare Prescription Drug Coverage

Plan sponsors that offer prescription drug coverage must provide notices of creditable or noncreditable coverage to those who are Medicare-eligible before each year's Medicare Part D annual enrollment period. Prescription drug coverage is creditable when it is at least equivalent in value to Medicare's standard Part D coverage and noncreditable when it does not provide, on average, as much coverage as Medicare's standard Part D plan.

The obligation to provide these notices is not limited to retirees and their dependents, but includes Medicare-eligible active employees and their dependents and Medicare-eligible COBRA participants and their dependents. The Centers for Medicare & Medicaid Services provides a Creditable Coverage Simplified Determination method that plan sponsors can use to determine if a plan provides creditable coverage.

"Disclosure of whether their prescription drug coverage is creditable allows individuals to make informed decisions about whether to remain in their current prescription drug plan or enroll in Medicare Part D during the Part D annual enrollment period," noted Richard Stover and Wai Kin Chan, consultants with HR advisory firm Buck.

COBRA or ACA Exchange?

If retiring before age 65, employees should consider whether to elect COBRA or to buy coverage from the Affordable Care Act's (ACA's) online exchange, Salazar said. Employees should ask, "Will I qualify for a subsidy under an exchange-purchased plan, and would that be more cost-effective than enrolling in my employer's COBRA plan?"

[SHRM members-only toolkit: Employing Older Workers]

Addressing HSA Confusion

Jeanne Thompson, head of workplace solutions thought leadership at Fidelity, explained that often, "those who are about to retire are just realizing that Medicare isn't free. Many employees have money in their HSA but don't understand how these accounts actually work once they retire." 

Since Medicare, as noted, is incompatible with making new HSA contributions, employers should help employees understand why, if they're age 65 or older, they should do the following:

  • Stop making contributions to their HSAs six months before they enroll in Medicare, or risk tax penalties. Once individuals enroll in Medicare, this coverage is retroactive up to six months before they signed up (but not beyond their initial month of eligibility, which is generally the month of their 65th birthday).
  • Not delay signing up for Medicare for more than seven months after retiring. This means not opting to take COBRA coverage beyond the seven-month post-employment window for enrolling in Medicare, or they'll face significantly higher Medicare premiums throughout their lifetime.

But while Medicare-enrolled retirees are no longer eligible to contribute to their HSA, they still can use the account's funds to pay premiums for Medicare and long-term care plans, as well as for out-of-pocket health care expenses.

HSAs are a potential retiree health care account, Thompson said, but "many don't realize their HSA dollars are not 'use it or lose it' at the end of the year like a flexible spending account. Or they don't understand the triple tax advantages of contributing, growing and withdrawing funds tax-free" when used for health care. In comparison, withdrawals from a traditional 401(k) plan are taxed as income, and Roth 401(k) contributions are made with after-tax dollars.

Significantly, "many don't realize they can invest HSA funds within the account in mutual funds, as they do with their 401(k) plan, for long-term account growth," Thompson noted.

HSA Misconceptions Impede Saving for Retirement Health Care

While more employees are contributing to a health savings account (HSA), a recent survey of 1,309 HSA account holders found misconceptions that could lead many to fail to maximize this benefit for long-term health care savings, including in retirement.


Among the more than 800,000 HSAs managed by Fidelity Investments, only 7.7 percent of account owners invested any portion of their savings last year.

Source: Fidelity Investments.


Only about 8 percent of people who have an HSA are actually investing the money, Murphy pointed out, although "we're seeing a shift toward using HSAs, at least in part, for retiree health care."

Not everyone can afford to accumulate funds in their HSA for long-term investment and growth, she acknowledged, "but for those that can, it's an amazing opportunity to save besides your 401(k)" for health care during retirement.

​Related SHRM Articles:

Employees Still Perplexed by HSA Plans During Open Enrollment, SHRM Online, October 2019

Medicare-Eligible Employees Pose HR Challenges, SHRM Online, February 2019

Early Retirement Health Care Quandary Keeps Workers on the Job, SHRM Online, July 2017

Benefits
Communication
Health Care Benefits
Health Savings Account (HSA)
Retirement Benefits

Related Articles

Kelly Dobbs Bunting speaks onstage at SHRM24
(opens in a new tab)
News
Why AI+HI Is Essential to Compliance

HR must always include human intelligence and oversight of AI in decision-making in hiring and firing, a legal expert said at SHRM24. She added that HR can ensure compliance by meeting the strictest AI standards, which will be in Colorado’s upcoming AI law.

(opens in a new tab)
News
A 4-Day Workweek? AI-Fueled Efficiencies Could Make It Happen

The proliferation of artificial intelligence in the workplace, and the ensuing expected increase in productivity and efficiency, could help usher in the four-day workweek, some experts predict.

(opens in a new tab)
News
How One Company Uses Digital Tools to Boost Employee Well-Being

Learn how Marsh McLennan successfully boosts staff well-being with digital tools, improving productivity and work satisfaction for more than 20,000 employees.

HR Daily Newsletter

Stay up to date with the latest HR news, trends, and expert advice each business day.

Success title

Success caption

Manage Subscriptions
  • About SHRM
  • Careers at SHRM
  • Press Room
  • Contact SHRM
  • Book a SHRM Executive Speaker
  • Advertise with Us
  • Partner with Us
  • Copyright & Permissions
  • Post a Job
  • Find an HR Job
Follow Us
  • LinkedIn
  • Facebook
  • Twitter
  • Instagram
  • YouTube
  • SHRM Newsletters
  • Ask An Advisor

© 2025 SHRM. All Rights Reserved

SHRM provides content as a service to its readers and members. It does not offer legal advice, and cannot guarantee the accuracy or suitability of its content for a particular purpose. Disclaimer


  1. Privacy Policy

  2. Terms of Use

  3. Accessibility

Join SHRM for Exclusive Access to Member Content

SHRM Members enjoy unlimited access to articles and exclusive member resources.

Already a member?
Free Article
Limit Reached

Get unlimited access to articles and member-exclusive resources.

You've reached the limit of 1 free article this month. Join to access unlimited articles and member-only resources.

Already a member?
Free Article
Exclusive Executive-Level Content

This content is for the SHRM Executive Network and Executive Content Subscription members only.

You've reached the limit of 1 free article this month. Join the Executive Network and enjoy unlimited content.

Already a member?
Free Article
Exclusive Executive-Level Content

This content is for the SHRM Executive Network and Executive Content Subscription members only.

You've reached the limit of 1 free article this month. Join and enjoy unlimited access to SHRM Executive Network Content.

Already a member?
Unlock Your Career with SHRM Membership

Please enjoy this free resource! Join SHRM for unlimited access to exclusive articles and tools.

Already a member?

Your membership is almost expired! Renew today for unlimited access to member content.

Renew now

Your membership has expired. Renew today for unlimited access to member content.

Renew Now

Your Executive Network membership is nearing its expiration. Renew now to maintain access.

Renew Now

Your membership has expired. Renew your Executive Network benefits today.

Renew Now