Between juggling work, family, and other responsibilities, staying on top of your health can be challenging. Thankfully, Medicare provides some helpful coverage options. However, suppose you’re retired or employed and have employer-sponsored health insurance. In that case, it’s essential to understand how Medicare works alongside that coverage.
When you have both Medicare and employment-based insurance, the size of your employer will determine how your Medicare benefits interact with your employer plan. If you are 65 or older and working for a firm with 20 or more workers, your group plan will be primary, and Medicare will be secondary.
This guide will help you understand Medicare and employer health coverage to make the best decision for you. So whether you’re just starting to plan for retirement or already there, this post should give you a good understanding of your coverage options. Stay healthy out there!
Active Employer Coverage
You are considered to be an active employee if you have continuous health coverage from your employer. In this circumstance, you have the choice of continuing to be enrolled in your employer’s group health insurance plan. Medicare can work in conjunction with your existing insurance. It’s up to Medicare to figure out how it’ll interact with it. Your employer’s size will influence how it engages. These rules also apply if you have group health insurance thru your spouse’s employment.
Retirement
When you retire, you’re no longer an active employee. In this situation, your employer may drop you from the group health insurance. There might be retirement health benefits coverage available to you if that is part of your retirement plan from your employer. However, fewer employers are offering health insurance as a retirement benefit in today’s landscape. If you are dropped from your group health coverage, it will make the most sense to signup for Medicare Part A and Part B if you already haven’t done so. While making your decision, you will want to explore additional coverage options. For example, Medicare Supplement coverage, Medicare Part D, and Medicare Advantage coverage also called Part C.
Medicare Advantage Plans
Medicare Advantage Plans are special types of Medicare plans offered by Medicare-approved private companies. These plans include all Part A and Part B benefits, as well as additional benefits in some cases. These extra benefits usually consist of:
- dental, vision, hearing
- over-the-counter pharmacy benefits
- meals delivered after a hospital stay
- some even offer pet boarding during a hospital stay.
Medicare Advantage Plans must follow some rules established by Medicare. Still, each plan may differ in how it offers Medicare coverage. For example, Medicare Advantage Plans may feature networks of physicians, hospitals, and pharmacies. You usually need to get your care from network providers to get the full benefit. However, some plans may offer out-of-network coverage.
Medicare and Employer Coverage — Large Companies with 20 or More Employees While Still Working
Medicare would be secondary coverage if you are 65 or older and still working for a firm with 20 or more employees. The Medicare Secondary Payer occurs when you are covered by another entity, such as a private insurer or another government program. That often refers to Medicare paying after your insurance has paid but before you receive the benefit.
Most individuals who enroll in Part A and have employer health coverage as a primary reduce their hospital expenses. People who have worked for at least ten years in the United States do not pay anything for Part A. Some people choose to put off Part B and Part D to preserve their income.
Medicare and employer coverage can be expensive. Medicare will serve as your supplementary insurance if you work for a company with 20 or more workers. That means that your primary insurance will pay for some, but usually not all, of your medical expenditures. Your employer’s health insurance will be your primary insurance, and it will pay for most of your medical bills. Furthermore, you may be required to pay a deductible and coinsurance in addition to your work plan. Medicare may also charge you a premium for Part B and Part D, which cover outpatient treatments and prescription medicines.
Medicare Part B and Part D Late Enrollment Penalty
Your large group plan will likely be considered creditable coverage when you enroll in Part B after your initial enrollment period. Because of this, if you choose to retire, you can enroll in Part B later without incurring a late enrollment penalty. When you quit the group plan, your healthcare provider will provide you with a letter of creditable coverage. Save this file for future reference. You’ll need it to prove to Medicare that you had other health insurance so you don’t get penalized for late Part B and Part D premiums.
What Happens if You Retire and then Go Back to Work?
Most people are curious about what occurs if they retire, receive Part B, and then find another job with employer coverage. At that point, you may terminate your Part B. Then, when you retire again, you will have another Medicare Supplement (Medigap) Open Enrollment Period. This open enrollment will be available for loss of group employer health insurance coverage.
COBRA Insurance and You
Medicare deals differently with COBRA than it does with active insurance. That is significant since so many individuals make this mistake, resulting in penalties. Group Insurance pays primary and Medicare second when you’re still working for a large firm. COBRA pays first, and then Medicare reimburses the expenditures. COBRA is an exception to this rule.
COBRA COVERAGE IS NOT CREDITABLE COVERAGE. YOU WILL RECEIVE A LATE ENROLLMENT PENALTY.
Suppose you were insured by COBRA and became Medicare eligible at age 65. In that case, you must enroll in Part A and Part B during your Initial Enrollment Period if you want to avoid the Later Enrollment Penalty.
COBRA coverage is available if you work past the age of 65 and then retire. Even if COBRA insurance continues beyond that period, you must join Part B within your eight-month loss of employer coverage window. Failure to join Medicare by the eighth month can result in a permanent Part B late enrollment penalty.
There is an exception for individuals with End-Stage Renal Disease, who will be reimbursed primarily through COBRA for the first 30 months.
You have the Option to Choose Medicare as Your Primary Insurance
Another alternative is for individuals with large group employer insurance to join Medicare as their primary coverage and then add a Medigap policy. Individuals who mainly do this have no dependents on their group health insurance. Those solely on their group health insurance and pay a premium for their group health insurance. Find it more economical to drop the group health insurance, enroll in Part A, Part B, and Part D, and elect a good Medicare Supplement Plan. Many individuals will also decrease their deductible payments and coinsurance.
It would be best to discuss that with your insurance provider to determine whether it’s worthwhile. The costs of your healthcare and insurance plans should also be considered. Your health deductibles, copays, and prescription drugs are all factors to consider. If you’re married and one partner is younger, the cost of health insurance for the other spouse must be considered.
Small Companies Under 20 Employees — Medicare and Employer Coverage
If you work for a company with less than 20 workers, Medicare will be your primary source of insurance. Medicare will pay for most of your medical bills as the primary. Your group health insurance, which is secondary, will likely be able to pay all or a majority of the deductibles, coinsurance, and copays Medicare doesn’t pay. That is determined on a case-by-case basis, and you will want to check with your group health administrator. Medicare will also charge you a premium for Part B and Part D.
Compare prices carefully. It is sometimes more cost-effective to forgo group health insurance altogether and sign up for a Medicare supplement as a secondary instead.
Exceptions to the HSA Rule
HSA-compatible health plans are an exception to the rule. HSA-compatible health plans are special types of health insurance that allow you to contribute to your HSA after Medicare enrollment.
You can’t contribute to a health savings account if you’re on Medicare. You also can’t accept any contributions from your employer if you have active Medicare coverage.
Suppose you are on an employer health insurance policy with 20 or more enrollees and contributing to an HSA and want to continue to contribute to the HSA. You will not want to enroll in any parts of Medicare as long as your group health insurance is creditable coverage. If you enroll in as little as Medicare Part A while on the group health insurance, you no longer be able to contribute to your HSA.
Can Employer Pay for Medicare Premiums?
Typically, your employer will not write a check for your Medicare Part B premiums. Instead, employers can set up a Section 105 Medical Reimbursement Plan to set aside monies for employees to utilize for health and dental insurance for themselves and their families. Thar includes Medicare Part B premiums on a regular basis.
A Section 105 plan entitles the employee to tax-free compensation for medical and other insurance costs. A popular type of Section 105 plan is a Health Reimbursement Arrangement or HRA. It reimburses eligible workers for their health insurance premiums and additional qualifying medical costs.
Can My Employer Pay My Medigap Premiums?
This idea may interest both you and your boss. Carrying older workers on a group insurance plan is frequently costly for your employer. Medicare and a Medicare Supplement Plan G or N will probably give you more comprehensive coverage.
It is, nevertheless, in violation of CMS regulations. For example, suppose you refuse your employer’s group insurance policy to acquire Medicare primary. In that case, your employer cannot pay your Medigap premiums on an individual basis. Circumstances might be allowed for the entire workforce under a section 105 reimbursement plan.
Under the Department of Labor’s Section 105 Reimbursement Plan, employers may deduct costs for workers enrolled in individual health insurance plans. In addition, the company may help pay for part of your Medicare premiums, including Medigap plans. Confirm with your workplace to determine whether they have a Section 105 plan.
Is it True that My Employer Can Remove Me from My Group Health Insurance When I Reach 65?
Employers can’t compel any actively working employee to choose Medicare over their company health plan, as it is against the law. You can leave the group healthcare coverage and enroll in Medicare as your insurance carrier instead. Still, your employer cannot force you to do so.
However, suppose you are enrolled in a former employer’s retiree plan after age 65 and no longer work for that company. In that case, the firm does not have to continue providing a retiree plan for its former employees. If your former employer offers health insurance, you can expect your coverage to be altered when you reach 65. Medicare becomes your primary insurance at age 65, and group coverage pays a secondary role.
Is it Possible to Enroll in a Medigap Policy Even if You Have Employer Coverage at a Huge Company Just to Be Sure?
That would be a terrible investment. A Medigap cannot pay for anything unless you have Medicare as your primary insurance. The application for the insurance company will ask if you are still employed. When people realize you have extensive group coverage, they may deny your request because they know it will be of minimal help to you. Medicare and employer insurance are both adequate forms of coverage.
Retiree Coverage
Medicare is the primary insurance for RETIREE coverage if your firm offers it after you have stopped working. Please find out how much it costs to maintain your retiree benefits by speaking with the administrator of your insurance program. If the premiums are high, you might consider choosing a Medigap and Part D drug plan instead of continuing to pay for retiree coverage.
