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-provided benefits is 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 will explain how your group coverage will 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 will pay first on the health insurance claims. Secondary means Medicare will pay after your employer-based insurance pays on the claim first.
Medicare will be 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’re given creditable employer coverage, you can cancel Part B. Then, when you actually retire, you’ll be given 6-month to apply for a Medigap policy during the Open Enrollment Period (OEP).
During the second OEP, you’re still given 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 may be able to save by using Part A hospital benefits if the group health insurance deductible is higher than the Part A deductible.
Delay Medicare Part B and Medicare Part D Enrollment
Beneficiaries still working are required to pay for their Medicare Part B benefits. Based on your salary is how your Medicare Part B’s monthly premium will be determined.
Group health insurance already pays for outpatient benefits and prescriptions. It won’t make sense to have Medicare 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 leave their group health insurance benefits and have Medicare serve as their primary insurance coverage.
You’ll want to factor in your group health insurance’s deductible, copayments, and medication coverage.
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 Medicare Parts A and B, despite certain group benefits offering to continue outpatient coverage.
You can delay enrolling in a Medicare 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 Medicare Part B benefits. If you return to the workforce and your offered healthcare benefits, you can cancel Medicare Part B.
You’re eligible again for your 6-month Open Enrollment Period for a Medigap Plan in the future, when you retire again.
COBRA is intended for an individual and/or their family, should they go for a period of time where they lose their group health insurance.
If you’re employed by a large group, then your employer is required to provide COBRA. Unlike with normal 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 Medicare 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 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 be reimbursed 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 not provided by Original Medicare, like Skilled Nursing benefits and foreign travel emergency coverage.
Health Savings Account Exceptions
If you contribute to a health savings account, you’ll want to avoid enrolling in Medicare altogether.
Obtaining Medicare benefits while having a health savings account means you can’t contribute to your account.
Additional Medicare Help
If you have 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. Simply 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!.