- Individuals over age 65 who currently receive group health plan coverage from their employers are also eligible for Medicare.
- Depending on the size of the company, these individuals may choose to enroll into Medicare immediately or delay enrollment until a later date.
- Medicare can be used along with a group health plan to cover most necessary medical services and needs.
Although retirement age ranges from 66 to 67 years old, Medicare eligibility for most individuals begins at age 65. Some people who continue to work past 65 may also have group health plan benefits through their employer.
Because of this, it’s possible to have both Medicare and a group health plan after age 65. For these individuals, Medicare and employer insurance can work together to ensure that healthcare needs and costs are covered.
In this article, we’ll look at how employee health coverage works, how Medicare eligibility works with group health plans, and things to consider about coverage and costs when you have both plans.
Employee health coverage, also known as a group health plan, is health insurance offered by a company, union, or similar employee organization for active employees.
Group health plan benefits cover a variety of healthcare services for active employees. In some cases, these plans cover benefits for dependents and spouses as well.
Most group health plans are required to follow federal healthcare law, which ensures:
- coverage of employees with preexisting health conditions, at the same rate
- coverage of employees even if they get sick
- free preventive healthcare visits
- increased coverage for young adults or younger employees
- no monetary limits on essential health benefits
- protection from employer retaliation and for personal provider choices
Group health plans must also follow the standards of conduct outlined by the Employee Retirement Income Security Act (ERISA). The U.S. Department of Labor enforces these standards of conduct for health plans in the private industry to protect covered employees.
While most group health plans offer comprehensive benefits as required by federal law, the coverage depends entirely on the plan. Knowing what kind of coverage your group health plan offers can help you determine whether you will need additional coverage from Medicare.
Medicare is a government-funded health insurance option available to Americans ages 65 and over and those with certain disabilities. When basic Medicare eligibility begins at age 65, an individual can apply for Medicare Part A and Medicare Part B.
Other people eligible to enroll include:
- those who have been diagnosed with a chronic disability and have been receiving Social Security or Railroad Retirement Board (RRB) benefits for 24 months
- those who have been diagnosed with amyotrophic lateral sclerosis (ALS) or end stage renal disease (ESRD)
If you’re receiving health insurance coverage from your current place of work but also qualify for Medicare, you may find yourself choosing between Medicare or your group health plan. In most cases, the size of the company you where you work determines whether you’ll face penalties for choosing not to enroll in Medicare when you’re eligible.
Here are the rules for choosing employer health benefits instead of Medicare:
- If your employer has fewer than 20 employees, you must sign up for Medicare when you’re eligible or you may face 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.
The Part B penalty for late enrollment in the situation above — or a similar situation in which enrollment is postponed — is a monthly premium increase of 10 percent for each 12-month period you didn’t sign up for Part B when eligible.
For example, let’s say that you turn 65 and still receive employer health benefits. The company you work for is a small company that has fewer than 20 employees. If you decided to wait 13 months to enroll in Medicare Part B, you would face a lifetime penalty of 10 percent added to your Part B premium each month.
Once you lose your employer health benefits, if you’re not already enrolled in Medicare, you will have a special enrollment period of 8 months to enroll in Part A and Part B. This special enrollment period begins the month after your employment or group health plan ends.
There is no late enrollment penalty for enrolling in original Medicare during this special enrollment period if the rules above were followed.
Although it isn’t recommended for most individuals, you may decide to decline Medicare entirely. If you decide to forego Medicare altogether, you must withdraw completely from any Social Security or RRB benefits you receive. You will also be required to repay any benefits you received up until your withdrawal.
Original Medicare offers comprehensive hospital and medical coverage, much in the same way that most employer health plans do. One type of coverage is not intended to replace the other. Instead, they can work in conjunction.
Medicare is intended to work together with employer benefits to cover your needs and help pay for most, if not all, of your medical expenses.
Before we explore how Medicare works with employer benefits, let’s look at how billing works with multiple health insurance plans:
- When you receive medical services, your primary insurance pays out first. This insurance is known as the primary payer.
- If there’s anything that your primary insurance didn’t cover, your secondary insurance pays out next. This insurance is known as the secondary payer. The secondary payer generally covers some, if not all, of the remaining costs.
Medicare is generally the primary payer if the company you work for has fewer than 20 employees. But Medicare becomes the secondary payer if your employer is part of a group health plan with other employers who have more than 20 employees.
Medicare is generally the secondary payer if the company you work for has 20 or more employees. In this case, your group health plan is the primary payer and Medicare pays out only after your employer’s plan has paid their portion.
The rules above are for general circumstances and may change depending on your specific situation. If you’re not sure whether Medicare will be the primary or secondary payer in your situation, you can call 855-798-2627 to speak to someone at Medicare’s Benefits Coordination & Recovery Center.
Medicare is individual health insurance coverage, which means that it doesn’t include coverage for spouses or dependents. Most group health plans, on the other hand, do include some sort of coverage option for dependents and spouses.
No matter what your group health plan offers, it’s important to understand that Medicare benefits aren’t extended to anyone other than the beneficiary.
This means that if the employee of the group health plan receives Medicare benefits along with their employer benefits, Medicare coverage applies only to the employee. Medicare does not pay out for services received by dependents or spouses, even if the original group health plan does.
Medicare has separate eligibility rules for spouses of beneficiaries. These eligibility rules, such as early eligibility and premium-free Part A, should be taken into consideration when considering overall health plan enrollment.
If you already have a group health plan and have become eligible for Medicare, it’s important to know when you should enroll. Understanding Medicare’s eligibility rules regarding employer health insurance can help you avoid unnecessary late enrollment fees.
You may want to take into consideration your health needs, medical expenses, and spousal coverage before you choose whether to skip Medicare enrollment.
No matter whether you enroll into Medicare sooner or later, Medicare can work with your group health plan to cover both your medical needs and your medical costs.
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