Navigating Medicare and Employer-Provided Health Insurance Plans
With open enrollment approaching, it’s important that those who are still working and are eligible for Medicare have a solid grasp on health insurance options and are able to make an educated decision on which plans will best suit their needs.
Navigating these choices can be complicated as beneficiaries can opt into Medicare or a combination of both Medicare and their employer’s health insurance plan.
In this article we’ll explore each coverage plan to help simplify the process and provide you with a better understanding of how these insurance plans work, what key information to familiarize yourself with, and resources available to you.
If you are enrolled in or considering Medicare, it’s encouraged to research and consider each coverage plan before making a final decision.
Medicare with Employer Health Coverage
Employer Health Insurance as the Primary
Your employer’s size dictates which plan Medicare eligible employees have access to. Simply put, if the company has more than 20 employees, the group plan is the primary insurance, which means that the group plan will pay first, and Medicare will pay second.
However, it is worth noting that Medicare eligible beneficiaries can, and are encouraged to, still sign up for Part A since the premium is free as long as you’ve paid enough Medicare taxes.
Although your employer group insurance is the primary, should there be a deductible upon a hospital visit that is more than the Part A deductible, you are provided the benefit of only having to pay their deductible for Part A.
Medicare as the Primary
If your employer has fewer than 20 employees, Medicare becomes your primary health insurance plan, meaning it will be billed first and your employer’s plan billed second.
If you fit under this category, it is still recommended to enroll in Part A, but also in Part B. While Part B is optional, by not enrolling, the employer group plan has the right to refuse paying for your claims.
In some instances, without Part B, your employer’s insurance provider may still cover claims. However, should the carrier change without notice, the responsibility to cover outpatient costs falls on you, the beneficiary.
Enrolling in Medicare While Working
When working for a larger company where group insurance is the primary, and the plan provides prescription coverage and outpatient benefits, you can delay enrollment into Part B and Part D.
While this is a common option as these are not premium-free like Part A, it is important to compare the group insurance cost to the cost of a Medicare Supplement plan as it may be cheaper, ultimately giving you the option to leave group insurance altogether.
Another thing to keep in mind if you work for a company that has more than 20 employees is that the insurance provider will be considered large group insurance, which is creditable coverage and allows you to delay enrolling in Medicare without incurring any late penalties when you’re ready to enroll.
When you do retire and leave your employer’s health coverage, the insurance carrier will mail you a creditable coverage letter that you will then need to show Medicare to protect against late penalties.
Additionally, anyone who is retired and enrolled in Medicare, but chooses to return to work can cancel Part B if their employer offers group insurance. Again, you will not incur any penalties when you re-retire and re-enroll in Part B.
Medicare without Employer Health Coverage
If your employer is covered under large employer coverage, you can drop the company’s health plan in favor of Medicare. Many who do this choose to pair a Medigap plan with Medicare as it can be more affordable.
However, be advised to compare both Part B and Medigap premiums with the employer coverage costs that are deducted from payroll and consider costs of medication, deductibles, and copays.
While your employer is not allowed to contribute to Medicare premiums, they can instead choose to set up a 105 Reimbursement Plan for all employees. This plan deducts money from employees’ salaries to buy individual insurance policies.
If you participate you can get tax-free reimbursements on insurance costs, including for your Part B premium. A Health Reimbursement Arrangement (HRA) is a popular section of the 105 plan that reimburses eligible employees for premiums, along with other medical costs.
Employers and Medicare beneficiaries are also not allowed to contribute to a Health Savings Account (HSA) as long as the employee is enrolled in Medicare. Otherwise, you could end up facing tax penalties.
This rule does not apply to your spouse if they are also covered under the group insurance, as long as their Medicare is not active. However, any funds in an HSA can be used to pay for any medical expenses.
Group health insurance can be difficult to understand and navigate on its own. Now add in Medicare and the various plan options and the enrollment process becomes even more complicated.
Be sure to always take the time to educate yourself on available coverage and pricing, along with the dos and don’ts of Medicare and employer health coverage in order to make the best decision for your health needs.
Are you still in the work force? Do you have a group insurance, or are you enrolled in Medicare? How well did you research your options before making a decision about your health coverage provider? Are you happy with your choice? What might you have done differently? Please share your thoughts and experience with our community!