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STEVE INSKEEP, HOST:

It is Monday. It's Columbus Day. For many people, it's a holiday. It's MORNING EDITION from NPR News. I'm Steve Inskeep.

Today in Your Health, we'll ask when you can know that it's time for a senior citizen to stop driving. First, we'll ask about senior health care. Open enrollment begins next week for Medicare. Seniors can make changes to their plans. Those just turning 65 face a lot of questions, especially if they're still working. And just one of those questions is whether to keep the employer's health insurance or switch to Medicare. Here's reporter Sarah Varney.

SARAH VARNEY, BYLINE: Bruce Osterweil is a lucky man to live just a short walk from where San Francisco's Golden Gate meets the cold, rough waters of the Pacific Ocean. He's also a lucky man to have married his wife, Patricia Furlong, who has long provided the family's health insurance through her job at a small financial consulting firm.

But last month, Osterweil's wife turned 65 and decided to retire. And although she may walk away with a crystal bowl or a golden watch for all those years of service, she'll also walk away from her company's generous health insurance benefits. That means Osterweil, who is 59 and a self-employed benefits consultant, is shopping for his own health insurance.

BRUCE OSTERWEIL: I am really surprised at how hard it could be for just the average person who isn't an actuary or benefits consultant to figure any of this out. It's astonishing.

VARNEY: When a spouse or parent signs up for Medicare, it is often perplexing and unnerving for the rest of the family who've grown used to cushy employer-sponsored coverage. Joe Baker is president of the Medicare Rights Center, the patient education group with a busy hotline for those with Medicare questions. Baker says, for example, young adults up to age 26 who were covered under their parent's insurance are no longer covered when their parent moves to Medicare.

JOE BAKER: Medicare doesn't cover dependents. However, if you're a dependent of someone who's losing coverage because they're retiring and going into the Medicare program, you can continue your coverage for three years under COBRA.

VARNEY: COBRA is a federal law that allows someone to pay full price to stay on their employer's group plan. They can also shop around for an individual plan. For healthy young adults, Baker says families should look to see if they can find less expensive coverage. That can be even more daunting for older adults who are more likely to have some health problems.

BAKER: We do frequently get calls from folks who cannot find individual insurance policies in the state in which they live, either because they have pre-existing conditions or the policies are so expensive that they really can't afford them either.

VARNEY: The younger spouses of Medicare beneficiaries who've been denied coverage and have been uninsured for six months can apply for coverage through their state's so-called high risk pools. There will be better options for older adults starting in 2014, says Baker. That's when a key provision of the federal health law will prohibit insurance companies from denying adults coverage because of a pre-existing condition.

Another confounding question is what to do when someone turns 65 and decides to keep working. Should they keep their insurance or sign up for Medicare coverage? Baker says the answer hinges on just how big of a company you work for.

BAKER: The rules are quite clear. If you're working at an employer with more than 20 employees and you have coverage through that employer or through a spouse that's employed at an employer with more than 20 employees, that coverage - you can continue to keep that coverage. That means that you don't really need to enroll in Medicare.

VARNEY: Baker says many people will still enroll in Part A of Medicare, which covers inpatient hospital care, because there's no premium and it may pay some of the costs not covered by your group health plan. But most don't enroll in Part B, which covers doctor's visits, because it costs about $100 a month and is often largely redundant.

It's a different story if you work at a small company with less than 20 employees. In that case, Baker says, the federal rule is you need to enroll in Medicare.

BAKER: Employers who think they're doing people a favor, like, Oh don't worry, you can stay on our plan. If they're under 20 full time employees, they risk the insurance company of that employer finding out that they are Medicare eligible and basically saying, you're off the plan, and by the way, everything we've paid after you turned 65 and were eligible for Medicare, you need to pay us back.

VARNEY: To avoid any foul ups, Baker says as people near their 65th birthday, they should start talking to their human resources department or call Social Security.

For NPR News, I'm Sarah Varney.

INSKEEP: This story was produced in collaboration with our partner Kaiser Health News, which is a nonprofit news service.

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