Medicare and Employer Coverage
Medicare, a health insurance program funded by the federal government, is created for older persons aged 65 and above.
If you have Employer Group Health coverage that will continue beyond age 65 then there are some important things you should consider. You may be able to delay Medicare until a later date when you decide to retire. In fact, delaying Medicare may
This suggests that they may enjoy health insurance benefits from both Medicare and a group health plan after age 65. Both insurance plans work together to cover healthcare services and costs for the beneficiary.
Have you wondered if it is possible to have both Medicare and an Employer group health plan? In this article, we’ll discuss all there is to know about employer coverage- how it works, how it can be combined with Medicare insurance, and what to do when you have both plans.
How Does Medicare Work With Employer Insurance?
If you have employer insurance, you can go ahead and have Medicare. These plans are designed to cover certain hospital and medical services and items. So, instead of replacing one another, they work together to offer comprehensive coverage.
Any health insurance you have is called a "payer." However, there is often a primary and secondary payer. In some rare cases, we could have a third payer. The decision on who becomes the primary payer is based on "coordination of benefits."
The "primary payer" pays for the healthcare bills it is to cover first. Whatever is left to pay or uncovered is sent to the "secondary payer" (supplemental payer) to pay.
If your secondary payer is Medicare, it may not pay all the remaining costs. However, if the insurance company (providing your employer health insurance) doesn't pay within 120 days, your healthcare provider may bill Medicare. Medicare may make a conditional payment and later recover the payments your primary payer should have made.
If your employer coverage is your secondary payer, you may need to enroll in Medicare Part B before they pay. You may have to pay any costs Medicare, or the employer insurance doesn't cover.
If you are under 65, disabled, and not currently employed but still enjoy coverage benefits from your former employer., Medicare becomes your primary payer, while the employer coverage pays second.
Can I Forego Medicare If I Have Employer Coverage?
Yes, you can, but it is not advisable to do so. However, if you are thinking of declining Medicare entirely, do well to consider your health needs, healthcare expenses, and spousal coverage before you take a final decision.
Having Medicare Part A insurance will reduce out-of-pocket costs for healthcare. Also, your employer coverage (if the group health plan is from a company with 20 or more employees) can serve as creditable coverage and cover prescription drugs and other expenses Medicare Part A will not cover.
As a creditable coverage, your employer insurance will prevent you from paying late enrollment penalties for Medicare Part B and Part D when you enroll later.
If you are not enrolling in Medicare, you must withdraw from receiving benefits from Social Security or Railroad Retirement Board. You must also repay any benefits you received up until your withdrawal.
Should I enroll in Medicare when I still have employer health insurance?
Sometimes eligible clients have been thrown into a dilemma- whether or not to choose Medicare over their employer coverage.
If you're in such a situation, note that the size of your employer's company determines whether you will pay penalties for delaying enrollment in Medicare when you become eligible.
Here's what we mean:
● If the company you work for has less than 20 employees and is not a member of a multi-employer or multiple employer group health plan, you must sign up for Medicare when you’re eligible. Else, you may be required to pay a late enrollment penalty for Part B when you sign up later.
● If your employer has 20 or more employees, you can delay signing up without any late enrollment penalties in the future.
● If you’re under age 65 and eligible for Medicare because of a disability, you’re not required to sign up until you turn 65. But if you’re still receiving group health insurance coverage at that time, the same rules listed above apply.
As soon as you retire and your employer coverage ends, you will have a special enrollment period (SEP) of 8 months to enroll in Part A and Part B (if you've not yet enrolled). This special enrollment period begins the month after your employer coverage or group health plan ends.
You wouldn't pay a late enrollment penalty during the special enrollment period if you followed the rules earlier stated.
In most cases, eligible persons sign up for Medicare Part A because it is premium-free for those who have paid Medicare taxes for at least 40 quarters. Additionally, you get automatically enrolled in premium-free Part A if you've received Social Security benefits for at least 24 months. After 24 months, you cannot collect Social Security Income (SSI) benefits without enrolling in Medicare Part A.
As a Medicare beneficiary, if you retire and return to work, you can pause your Medicare Part B benefits and re-enroll in an employer insurance plan. When you retire fully, or the employer coverage ends, you can enroll back into Medicare Part B without paying the penalty.
Does My Employer Coverage Affect Enrollment in Medicare Part D?
If your employer insurance includes creditable prescription drug coverage, you do not need to enroll in a Medicare Part D plan till the employer coverage ends.
With a creditable coverage, you can delay enrollment to Medicare Part D without incurring any penalties. Since the coverages will not work together, you can enjoy prescription drug coverage from your employer insurance and stall Part D enrollment.
However, make sure you compare health needs, cost, and coverage when choosing between your employer insurance and Original Medicare plus a Medigap plan plus a Medicare Part D plan. Usually, one is more cost-effective than the other.
Does Having Both Medicare And Employer Benefits Cover My Spouse?
Medicare coverage doesn't extend to the beneficiary's spouse or dependents. If you (the employee) are a beneficiary of both Medicare and your employer insurance, know that Medicare is individual health insurance that covers only you (the employee). On the other hand, most group plans offer a level of coverage for spouses and dependents.
Medicare has separate eligibility rules for spouses of beneficiaries. These eligibility rules, such as early eligibility and premium-free Part A, should be considered when considering overall health plan enrollment.
What if My Employer Coverage Is That Of My Spouse's Current Employer?
If you have employer coverage, courtesy of your spouse, it doesn't affect your Medicare benefits.
Your spouse's plan becomes the primary payer if:
● You’re retired, but your spouse is still working.
● You’re covered by your spouse’s employer's coverage.
● Your spouse's employer has less than 20 employees but is part of a multi-employer plan or multiple employer plan.
● Your spouse’s employer has 20 or more employees.
Hence, your doctor or healthcare provider sends your bill to your spouse's insurance company first. Whatever is left unpaid is sent to Medicare for secondary payment. If both insurances do not cover some services, you will have to pay for them.
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