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Understanding Medicare and Retiree Insurance


Sometimes after you retire, your employer will offer group insurance. This type of insurance is called retiree insurance, but how does it work with Medicare? While you might have retired early, you should be informed about the answer to this and other questions before you’re eligible.

How Does Medicare Work with Retiree Insurance?

In general, if you have Medicare and retiree insurance, Medicare will pay your health care bills first. In this case, your group coverage is your secondary insurance. Thus, it acts similar to a Medicare Supplement policy. To get full benefits from your retiree insurance, you’ll want to enroll in Part A and Part B when you become eligible.

Retiree insurance isn’t creditable coverage, and you want to avoid penalties. Each employer plan is different, so contact your human resources representative for more details.

If you’re considering dropping your retiree insurance for Medicare, you can. Remember, though, ineligible spouses and dependents can’t enroll with you. They’ll lose their coverage through your employer’s plan if you unenroll.

In the case that your previous employer goes bankrupt or shuts down, you’ll be eligible for COBRA. However, that usually isn’t the best option if you also have Medicare. You could get a Special Enrollment Period to buy a Medigap policy, which is worth utilizing.

What Types of Retiree Insurance Coordinate with Medicare?

Some types of retiree insurance that coordinate with Medicare are PFFS, Health Maintenance Organizations, and Preferred Provider Organizations plans. If you have a Private Fee-for-Service (PFFS) plan, it will act like a Medigap policy by covering Medicare cost-sharing. An HMO or PPO plan will require you to stay in a network, or else you’ll have to pay cost-sharing for Medicare.

Both HMOs and PPOs are known as managed care. Occasionally, an employer will sponsor a Medicare Advantage or Medigap plan for eligible retirees. An Advantage plan is optional, and you can take Original Medicare instead. If you choose to enroll in an employer-sponsored Medigap plan, you’ll need to have Parts A and B first.

FAQs

Can you continue your employee coverage after you retire?
If your employer offers retiree insurance, you can continue coverage past retirement. Speak to your plan administrator or human resources representative for more details about your specific plan.
Do I need Part D if I have retiree coverage?
If you prefer your employer drug coverage to Part D and it counts as creditable coverage, you can keep it. However, if you don’t have creditable drug coverage, it’s best to enroll in Part D as soon as you’re eligible to avoid penalties.
What happens to your retiree coverage when you're eligible for Medicare?
Your retiree insurance can work with Medicare. It’s best to enroll in Part A and Part B during your Initial Enrollment Period to avoid penalties. In general, Medicare will be your primary insurance, and your retiree insurance will be secondary.
What are the costs and coverage of retiree insurance?
If your employer or union offers retiree coverage, how much it pays may be limited. Sometimes, they only provide stop-loss coverage, which means paying once a maximum is reached.

How to Get Answers to Retirement Insurance and Medicare Questions

We know that navigating coverage options can be confusing. That’s where we come in. We’re here to help you understand your options from the inside out. As a result, you’ll feel better prepared when it’s time for you to choose the best combination of coverage.

Please call us at the number above. We have agents licensed in your state, ready to help. If you’re short on time, you can fill out our rates form instead. We’ll prepare a comparison of premium rate quotes for plans in your area.

Lindsay Malzone

Lindsay Malzone is the Medicare expert for MedicareFAQ. She has been working in the Medicare industry since 2017. She is featured in many publications as well as writes regularly for other expert columns regarding Medicare. You can also find her over on our Medicare Channel on YouTube as well as contributing to our Medicare Community on Facebook.

2 thoughts on “Understanding Medicare and Retiree Insurance

  1. Do I need to apply for Medicare Parts C and D after I retire, I am 65 and already have Parts A and B. My employer has a plan for Medical and Perscription when I retire.
    Is it good to have both Medicare Parts C and D and my Employer medical plan that covers the same things?

    1. Hi Neal! Since each employer plan is different, I’m unable to give you advice on which route to go. You would want to speak to your benefits administrator to find the best route to go.

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