If you have plans to continue working past your retirement age, there’s one crucial detail you can’t afford to overlook- healthcare.
The traditional retirement age for Americans is 65, which also happens to be the Medicare eligibility age.
So when you don’t retire at 65 and become eligible for Medicare, what happens with your health insurance situation? Should you drop your employer’s group health insurance and have your employer pay your Medicare premiums?
Keep reading for the answers and much more Medicare-related questions so that you can have more information before you ask “can my employer pay my Medicare premiums?”
What Happens To My Health Insurance When I Turn 65
You will also be enrolled in Part A Medicare when you turn 65. Therefore, you will have two plans: your employer’s group health plan and Medicare.
One of these health insurance providers have to be your primary health insurance, and the other one has to be your secondary health insurance.
The size of your company is what will determine who will be your primary health insurance provider. If your company has 20 or more employees, your employer’s group insurance will be your primary healthcare provider and Medicare will be your secondary.
On the other hand, if your employer has less than 20 employees, Medicare becomes your primary insurer. In this case, you might want to enroll for Medicare Part B as soon as you become eligible.
Primary and secondary insurer denotes who pays first when you incur medical expenses. If your primary insurer is the employer, your group health insurance plan pays first, and then your Medicare coverage takes care of all or part of any remaining costs.
If Medicare becomes your primary insurer, your Medicare coverage will cover all or part of your Medicare-approved expenses, then you employer’s coverage will cover the remaining expenses.
Can My Employer Pay My Medicare Premiums
Employers can pay Medicare premiums for active employees if the company’s payment plan is integrated with the group’s health plan.
For example, the linked group plan must provide minimum value by paying for at least 60 percent of the actuarial vale of services received. These payments must be limited to Medicare Part B, Medicare Part D.
Another way an employer can pay is through the Internal Revenue Code (IRC). Under IRC’s Section 105 Plan, employers are allowed to reimburse their employees their Medicare health insurance premiums.
The section 105 reimbursement plan allows employers to give an allowance to its aging Medicare-insured workforce for a broad range of medical premiums including Medicare Part B, Medicare Part D, Medicare Advantage, and Medigap.
Should I Rely on My Employer-Sponsored Plan or Medicare
If you choose to keep working past your retirement, this is one of the issues you are going to have to settle first. Everyone past the age of 65 needs health insurance.
Whether you get it via your spouse, employer or Medicare will depend on the individual situation. Look at the key plan features, maximum out of pocket costs, and deductibles before you make any decisions.
It’s not just about the premiums. Do your current doctors accept Medicare? Are you satisfied with their service? If your employer’s plan provides the most benefits, you might want to stick with it as your primary coverage. Note that when you turn 65, you may be enrolled in Medicare Part A automatically.
If you decide to stick with your employer’s group health insurance, check with Medicare to see if you can put off enrolling for Medicare Part B.
In some cases, your employer may require you to enroll in Medicare. Inquire about how plan changes might impact your coverage.
Should you decide to drop your employer’s group health insurance plan for Medicare, think about your spouse if he/she is covered under your employer’s plan. If you are married, the two of you may have to purchase two separate Medicare policies.
Are There Any Restrictions
Employees are free to decide what to do with their coverage. As for the employer, there are a few restrictions regarding their role in the employee’s decision to opt for Medicare or the company’s group health insurance.
For instance, the employer is prohibited from giving an employee any form of incentives to reject the employer’s group health plan and choose Medicare.
Medicare Learning Resources
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