Medicare Planning for Public Employees: What You Need to Know Before Age 65

If you’re a public employee approaching retirement, you’ve probably heard a lot about Medicare. But how does it work if you already have retiree health coverage from your employer, like TRS-Care in Texas or a similar plan? Should you sign up for Medicare anyway? How do the two work together?

Understanding Medicare as a public sector retiree can help you avoid costly mistakes and make the most of your benefits. Let’s break it down.

What Is Medicare?

Medicare is the federal health insurance program for people age 65 and older, and for some younger individuals with disabilities. It has four parts:

• Part A: Hospital insurance (usually free if you’ve worked and paid Medicare taxes)
• Part B: Medical insurance (doctor visits, outpatient care—has a monthly premium)
• Part D: Prescription drug coverage
• Part C: Medicare Advantage, which bundles A and B (and often D) through private companies

Most people enroll in Original Medicare (Parts A and B), and then add a Part D plan or a supplement.

What If You Have Retiree Health Insurance?

Many public employees retire with access to a retiree health plan, such as TRS-Care in Texas or other employer-sponsored coverage. These plans often change once you turn 65 and become eligible for Medicare.

For example, TRS-Care becomes TRS-Care Medicare Advantage at age 65, and it requires you to be enrolled in both Medicare Part A and Part B to keep your coverage.

That means you still need to sign up for Medicare, even if you have retiree health benefits. Failing to do so can cause your plan to drop you—or stick you with large out-of-pocket costs.

When Should You Enroll?

If you’re already receiving Social Security when you turn 65, you’ll be automatically enrolled in Medicare. If not, you’ll need to sign up during your Initial Enrollment Period, which starts three months before the month you turn 65 and ends three months after.

If you miss this window, you may have to pay late enrollment penalties that last for the rest of your life.

What Is IRMAA and Why It Matters

If your income is above certain levels, Medicare charges you more for Part B and Part D. This extra amount is called IRMAA (Income-Related Monthly Adjustment Amount). The government looks at your income from two years ago to decide how much you pay.

For example, if your income was above $206,000 as a married couple in 2023, you might pay significantly more for Medicare in 2025.

This is especially important for retirees who do Roth conversions, take large distributions, or sell investments with big gains. Planning your income carefully can help you avoid or reduce IRMAA charges.

Do You Need a Medigap Policy?

A Medigap plan helps pay for costs that Original Medicare doesn’t cover, like deductibles and coinsurance. But if your retiree health plan acts as secondary insurance or includes a Medicare Advantage plan, you may not need a Medigap policy at all.

In fact, you often can’t have both a Medicare Advantage plan and a Medigap policy. Be sure to check how your retiree plan works with Medicare before enrolling in anything extra.

Key Questions to Ask Before Age 65

• Does my retiree health plan require me to enroll in Medicare?
• Will it coordinate with Medicare or switch to a Medicare Advantage plan?
• What do I need to do to keep my current doctors?
• How much will Medicare and my retiree coverage cost together?
• Should I worry about IRMAA and income planning?

The Bottom Line

Medicare planning is more complicated when you’re a public employee with retiree health benefits—but it’s also more important. Signing up on time, understanding how your plan works with Medicare, and planning for potential IRMAA charges can all help you make the most of your health coverage in retirement.

Confused about how Medicare fits into your retirement plan? Schedule a free consultation and let’s walk through it together.

*We believe the information provided is accurate, but it’s not intended as tax or legal advice and shouldn’t be used to avoid federal tax penalties. For guidance on your specific situation, please consult your own tax or legal advisor. If you’re doing estate planning, it’s important to work with professionals, including your attorney or tax expert. This content does not include specific investment advice or recommendations to buy or sell any securities. Also, while strategies like asset allocation and diversification can help manage risk, they do not guarantee profits or protect against losses in a declining market.