Medicare coordinates benefits with your Employer Coverage

Employer Group Coverage

There are important factors that you must consider if you are 65 + (or turning 65 soon) and will also have Medicare and Employer Coverage:

  • Options to keep your employer insurance and Medicare will coordinate with your employer coverage.
  • Compare the cost of that employer coverage against what it would cost you to roll over to Medicare as your primary insurance.

You have to take the time and go over with your current employer benefits administrator and determine how medicare will work with your coverage in order to get the best cost coverage.

You also want to avoid any Medicare late enrollment penalties. You can make your transition easier by contacting us. Our licensed agents can go over your situation and help you establish the most effective path. Remember, our services are always free.

Acitve Employer Coverage means you are not retired and you are actively working. You will have the following to consider:

  • You can choose to stay in your Employer’s Group Health Insurance.
  • Coordination of Benefits between Medicare and your Employers Group Health depends on the size of your Employer
  • 20 Employees of less – Medicare (Primary) Employer Group (Secondary)
  • Large Employers of 20+ or more – Employer Group (Primary)  Medicare (Secondary)
  • These same rules will apply if your group health coverage is through your Spouse’s employer.

As mentioned in the previous topic, Medicare is secondary if you’re age 65 or older and your employer has more than 20 employees and you are still ACTIVELY working (not a retiree or on COBRA). This is called Medicare Secondary Payer. Your group plan pays first, and then Medicare pays second.

  1. Active employees with group coverage enroll in Part A because it is premium-free if you have ten years work history.
  2. Part A can help coordinate to lower your costs.

It doesn’t necessarily work the same way with Part B and Part B costs money (see the next section), so that’s why most people choose Part A only when working for a large employer.

One exception would be if you are contributing to an HSA account and plan to continue doing so. If that’s the case, do not enroll in Part A. Read more on that on the topic below “What If I Have a Health Savings Account?”

Now that Part B is not premium-free you will have to pay a monthly premium for Part B based on your income. You may choose to Delay your enrollment in Medicare Part B and Part D while you are still covered under your Employers Group Health coverage (or your spouse’s group health coverage).

This saves you the premiums you would have paid on Part B and/or Part D. It’s not worth it to pay Part B and D premiums if your Employer Group Coverage covers you on Doctors Visits, Outpatient Services, etc.

When you Delay your Part B:

  • You have Creditable Coverage due to the large group plan coverage that you have.
  • You can enroll in Part B at later date without late penalty when you do decide to retire.

When you quit and leave your Employer Group Plan:

  1. Your insurance company will send you a Creditable Coverage Letter.
  2. Show Medicare your Creditable Coverage Letter so you are not subject to late penalties for Parts B and D.

If you retire, get Part B, and then later you decide to work again and get new job that has employer insurance.

  • You can cancel Part B at that time.
  • When you retire later: You will have a second 6-month Open Enrollment window to get either a Medicare Supplement or an Medicare Advantage plan.

If you have COBRA you must read carefully as many people make the wrong assumptions and end up owing penalties.

Remember how the coordination works when you are still actively working at a large employer? Your Group Insurance is Primary and Medicare Secondary.

COBRA is just the opposite. Medicare pays first and COBRA pays second.

Rules when you have COBRA:

  • If you are under 65 and on COBRA, then when you turn 65 you must enroll in Part A and B during your Initial Enrollment Period.
  • Failure to enroll during your IEP will result in a lifelong penalty.
  • You can keep COBRA if you like and let it pay secondary instead of having a Medicare Supplement plan.
  • Do Not miss enrolling in both Part A and Part B during your Initial Enrollment Period, which begins 3 months before your 65th birthday month and ends 3 months after your 65th birthday month.

If you work past age 65 and then you retire, remember that you must enroll in Part B. You will have  3 months before your 65th birthday month and ends 3 months after your 65th birthday month no later. Even if COBRA continues beyond, your failure to enroll can result in a permanent late enrollment penalty for Part B. It could also delay your Medicare Part B until July of the following year. You could be at great risk if you have to wait months to buy Part B.

If you belong in a large group employer insurance you also have another option:

  1. You can leave your group health plan and choose Medicare as your primary insurance, and then add a Medicare Supplement. This can be a cheaper option for you or your spouse. It can reduce your deductibles and eliminate Co-pays.
  2. It can be cost-effective depending on how much your employer coverage costs you each month in your payroll deductions. Your plan deductible, co-pays, and your medication usage also are factors.
  3. If you are married and one spouse is younger, you must also consider the cost of health insurance for the spouse that will be getting Medicare.

Nevada Medicare can help you decide if you should enroll in Part B now or later. We will go through your current coverages and make sure how all your costs will be covered. Call us and let us help you establish the best path to ensure your are covered in every way at the lowest cost possible.

If you work for an employer that has less than 20 employees, Medicare will be your Primary Insurance if you are 65 or older.

  1. You will need both Part A & B for sure because Medicare will pay first, and then your group insurance will pay secondary.
  2. There are some insurance companies who will cover claims even if you don’t have Part B. We do not recommend this for the simple fact that the insurance company can change that at any time at will. This can  leave you paying all the expenses that Part B would normally cover. It is a risk but ask yourself if it’s worth it.
  3. if your employer has less than 20 employees we advise to enroll in Parts A & B and make Medicare the primary.

If you group plan has prescription drug benefits you may be able to delay enrolling in a Part D drug plan without penalty. But be sure to compare costs. Sometime situations, it is better to leave the group insurance altogether and enroll in a Medicare supplement as your secondary instead to lower your costs.

If you contribute to a Health Savings Account (HSA) you may be subject to Tax penalties if you are in Medicare and have employer health insurance. 

HSA CAUTION

HSA-compatible health plans have exceptions on either large or small employer coverage:

  1. Do Not enroll in Medicare If you have a Qualified High Deductible health plan and you plan to contribute into a health savings account. You cannot contribute, if you are enrolled in any part of Medicare.
  2. If you have Medicare you will not be able to accept any contributions from an employer.

NO. Your employer cannot actually write a check for your Medicare Part B premiums when Social Security sends you a bill for Part B. They can however do the following:

  1. Employers can form a Section 105 Medical Reimbursement Plan, which will enable them to set funds aside for workers to use toward health insurance and dental insurance for the employees and family. This includes Medicare Part B premiums. A Section 105 plan allows tax-free reimbursement of the employee’s medical and other insurance expenses.
  2. They can establish a Health Reimbursement Arrangement, or HRA. It is designed to reimburse eligible employees for their individual health insurance premiums and other qualified medical expenses.

Although this idea might appeal to both you and your employer. It’s often expensive for your employer to carry older employees on the group plan, and you are likely to get more comprehensive coverage with Medicare and a Plan G or N Supplement plans.

This is against CMS rules. If you reject your employer’s group insurance plan to choose Medicare as primary, the employer cannot pay your Medicare Supplement premiums on an individual basis.

  1. An employer must set up a section 105 reimbursement plan for their group as a whole.
  2. A Section 105 Reimbursement Plan allows the employer to deduct expenses for employees who purchase individual health insurance plans. Eligible employees can participate and the employer can reimburse premiums for Medicare Parts A and B as well as Medicare Supplement.Check with your employer to see if they have a Section 105 plan in place.

Your employer cannot make you choose Medicare as your primary insurance. You have an option to choose but It is illegal for an employer to force any actively working employee to choose Medicare instead of their group health plan. There are 2 things to keep in mind:

  1. Realize that if you are on retiree coverage from a former employer where you are no longer actively working, the employer does not have to provide a retiree plan for former employees after age 65. If that former employer DOES offer coverage, your benefits will likely change when you turn 65. This is because when you are age 65 and have retiree coverage, Medicare becomes your primary insurance, and your group coverage now pays secondary.
  2. Prices and benefits from your employer coverage may be different once you turn 65. For instance, if their retiree plan for people age 65 and older is a Medicare Advantage plan, then you will need to choose whether you want to enroll in that at 65 or switch to Original Medicare (Government) as your coverage. Factors to consider are premiums, how your medications will be covered, and whether you have a younger spouse that needs to stay on your plan.

A Medicare Supplement cannot pay for anything unless Medicare is your primary insurance. Remember that Medicare Supplement only covers the 20% that Medicare does not cover. If Medicare is secondary then it will most likely cover what the group plan will not. Medicare and Employer coverage will be good enough coverage.

The Medicare Supplement company will also deny your application once they realize that you have both Employer Group and Medicare as secondary.

If you have RETIREE coverage through your last employer after you have stopped actively working, Medicare is PRIMARY to that coverage.

Consult with the your retiree coverage administrator to find out the costs for keeping that coverage. If the costs are high, you might consider leaving the retiree coverage for a Medicare Supplement and Part D drug plan or a Medicare Advantage Plan instead.

Although you now have an idea of what your options are, deciding on all of these things requires:

  • Precise Cost Analysis – Medicare costs and your group coverage and their costs, co-pays, and deductibles.
  • Current health and future potential situations that you need to consider

We will be the first to tell you if it makes sense for you to stay with your employer coverage. At Nevada Medicare we can guide you through all of this and advise you on the path you need to consider.

The first step to setting up affordable health insurance is knowledge. Let our experts help you learn your basic benefits. Call Us our help is always 100% free.