Medicare and Employer Insurance Coverage

Original Medicare is made up of Part A and Part B. It offers comprehensive hospital and medical coverage, much in the same way that most employer health plans do. One type of plan is not intended to replace the other. Instead, they can work in conjunction.

Medicare is meant to work together with employer benefits to cover your healthcare needs and help pay for most, if not all, of your medical expenses.

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 and your group health plan. In most cases, the size of the company where you work determines whether you’ll face penalties for not enrolling 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 65 years old and eligible for Medicare because of a disability, you’re not required to sign up until you turn 65 years old. But if you’re still receiving group health insurance coverage at that time, the same rules listed above apply.

Once you retire and give up your employer health benefits, you will have a special enrollment period of eight months to enroll in Part A and Part B, if you haven’t enrolled already. 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 Railroad Retirement Board (RRB) benefits you receive. You will also be required to repay any benefits you received up until your withdrawal.

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.

Here’s how to know who the primary and secondary payers are in your situation:

• Medicare is 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 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 the Centers for Medicare & Medicaid Service’s Benefits Coordination & Recovery Center.

You can’t contribute to a health savings account (HSA) while on Medicare. A health savings account (HSA) lets you set aside pre-tax income in an account to pay for certain medical expenses. This saves you money on overall healthcare costs.

If you are 65 years old or over, your Part A coverage will start up to six months before the date you sign up. You will face a tax penalty if your Part A coverage overlaps with when you put money into your HSA.

To avoid penalties, you and your employer should stop putting money into an HSA six months before you plan to retire or apply for Social Security or RRB benefits.

If you have a high deductible health plan with an HSA based on you or your spouse’s employment, you may be eligible for a special enrollment period. This will allow you to sign up for Part B without a penalty.

You will still be able to withdraw money from your HSA after your coverage starts. Money from HSA accounts can be used to pay for qualified medical expenses like

• deductibles
• premiums
• coinsurance
• copayments

Medicare is individual health insurance coverage. 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 and HSAs can help you avoid unnecessary 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 in Medicare sooner or later, Medicare can work with your group health plan to cover both your medical needs and your medical costs.