Once you’re 65 years of age, you become automatically eligible for Medicare benefits. If you’re 65, still working, and your place of employment offers health insurance, you’ll have some research to do. While Medicare and Employer coverage works for some, it doesn’t work for all.
Many baby boomers are choosing to work after turning 65. Knowing if Medicare benefits will be primary or secondary to your employer, benefits are crucial.
When you understand how your coverage works, you can get the most out of your coverage. Beneficiaries would speak with the benefits administrator.
The benefits administrator can explain how your group coverage can complement or conflict with Medicare.
Medicare and Employer Coverage
The size of the company you work for will determine whether Medicare will a primary or secondary payer.
Primary means Medicare pays first on the health insurance claims. Secondary means Medicare will pay after your employer insurance pays on the claim first.
Medicare is your primary insurance carrier if your company consists of less than 20 employees.
Employers with 20 or more employees provide group health insurance, and Medicare will be secondary.
Additionally, if you return to work after retiring and you’ll receive creditable employer coverage, you can cancel Part B. Then, when you finally retire, you’ll be given 6-month to apply for a Medigap policy during the Open Enrollment Period (OEP).
During the second OEP, you receive Guarantee Issue rights.
Large Employer Group Coverage and Medicare
Beneficiaries with large group insurance can have group health insurance as primary and Medicare as secondary.
You can enroll in Part A as the benefits are free after having worked for at least ten years.
Beneficiaries can save by using Part A hospital benefits if the group health insurance deductible is higher than the Part A deductible.
Delay Part B and Part D Enrollment
Group health insurance already pays for outpatient benefits and prescriptions. It won’t make sense to have Part B and D benefits when you already have those through the employer.
Once turning 65, you can choose to delay their enrollment without having to pay the Part B penalty. Once you retire or quit, your employer provides a letter stating you’re no longer with the group health insurance.
Medicare will then let you enroll for their Part B and Part D benefits as you would during your Initial Enrollment Period.
Leaving your Group Health Insurance Benefits
Employees can choose to have Medicare serve as their primary insurance coverage when they terminate the employer plan.
You’ll want to factor in your group health insurance’s deductible, copayments, and medication coverage. Also, consider the size of your employer; talking with the benefits administrator at the office where you work can be helpful.
If out of pocket costs are higher with the group health plan, choosing Medicare can save money.
Small Employer Group Coverage and Medicare
For beneficiaries that work for an employer of less than 20, Medicare will provide primary coverage, leaving the group health plan as secondary.
It’s always recommended to enroll in Parts A and B, despite certain group benefits offering to continue outpatient coverage.
You can delay enrolling in Part D without paying the Part D penalty, as long as your group health benefits offer prescription drug coverage.
Whether employed by a large or small company, it’s illegal for your employer to force Medicare over group health insurance.
Medicare and Retirement
After retirement, you’re eligible to enroll in Part B benefits. If you return to the workforce and your offered healthcare benefits, you can cancel Part B.
You’re eligible again for your 6-month Open Enrollment Period for a Medigap Plan in the future, when you retire.
COBRA is for an individual or family, should they go for a period where they lose their group health insurance.
If a large group employs you, then your employer is required to provide COBRA. Unlike with traditional group health insurance where group health is primary and Medicare is secondary, it’s the opposite with COBRA.
If you’re 65 with COBRA, the law states you must obtain Part A and B benefits. COBRA will take place as your secondary health insurance.
Failing to enroll in Medicare during your 6-month Initial Enrollment Period will result in you paying the penalty.
Medicare benefits continue with COBRA coverage, or you can decide to go with a Medicare Supplement Plan.
Medigap plans are more suitable for Medicare than COBRA.
Medicare Premiums and Employer Contributions
Medicare and employer coverage can work together in some cases.
According to the Centers for Medicare and Medicaid Services, it’s illegal for employers to contribute to Medicare premiums.
The exception is employers who set up a 105 Reimbursement Plan for all employees.
This plan deducts money from the employees’ salaries to purchase individual insurance policies.
Beneficiaries who participate can receive reimbursement for Medicare premiums.
No matter what you decide, there are ways to save money and get extra benefits.
Medicare Supplement plans work in conjunction with Medicare benefits.
Medigap provides coverage for the 20% not covered by Medicare.
Additionally, Medicare Supplements have benefits beyond Medicare, like Skilled Nursing benefits and foreign travel emergency coverage.
Health Savings Account Exceptions
Obtaining Medicare benefits while having a health savings account means you can’t contribute to your account anymore. You can use your HSA to pay for your out of pocket medical expenses, but you cannot continue to add to it.
Additional Medicare Help
If you have any questions, we can help! If you’re having a hard time choosing Medicare over group health insurance, contact us today.
We can help answer all these questions and more. Give us a call or fill out our online forms. Our licensed insurance agents are available and happy to help with whatever you may need, don’t hesitate to call!.
Can I Drop My Employer Health Insurance for Medicare?
Yes, you can drop employer health insurance for Medicare; however, you need to proceed with caution. Depending on the size of your employer, switching to Medicare could be beneficial or mandatory.
The first thing to do is to discuss options with the benefits administrator in the office where you work. Also, it’s important to remember that when you leave an employer plan, you might not be able to get back on it.
So, in the future, if you’re unhappy with Medicare, switching back to your employer plan likely won’t be an option.