Medicare and employer health insurance are two different types of coverage that many people have at the same time. Medicare is a federal program for senior citizens, while employer health insurance is an employee benefit from a company.
Medicare provides basic coverage, but does not cover things like dental care or prescription drugs. Employer health insurance, on the other hand, will sometimes provide these additional benefits to its beneficiaries on top of basic medical coverage. In this blog post, we’ll explore how Medicare and employer coverage work together so you can better understand your coverage options going forward.
How Medicare Coverage Works With Other Types of Insurance
Let’s start by talking about how Medicare works when you have some other type of health coverage. In these types of situations, there is always a primary payer and a secondary payer. Whether Medicare or your other health insurance acts as the primary or secondary payer depends on what type of other coverage you have.
Take a look at this helpful blog post, which outlines all of the ways that Medicare can be combined with another type of health insurance plan.
Retiree Health Insurance Coverage
You may be someone who is no longer working but still receives coverage from a former employer. If you are a Medicare beneficiary who also receives retiree health insurance, Medicare generally pays your health care bills first, and your former employer’s group health plan coverage pays second.
You should know that just because you have retiree coverage doesn’t mean you are exempt from enrolling in Medicare. Retiree insurance may not cover the costs of your medical expenses during any time that you were eligible for Medicare but didn’t sign up for it. Plus, if you don’t enroll in Medicare when you are first able to, you could very well have to pay late enrollment penalty fees down the line.
Plus, your former employer has no obligation to continue your retiree insurance coverage, meaning that your benefits and premiums can change over time, and you could even lose your coverage altogether. When your Medicare coverage starts, be sure to get information about your retiree health benefits so you can have a good understanding of how the two health plans work together.
Insurance Coverage From Current Employer
If you sign up for Medicare while you are still working and covered under your employer’s group health insurance, there are a couple of factors that impact how your medical expenses are covered.
Remember, if you are turning 65 and aren’t receiving Social Security benefits from the federal government, you will not be automatically enrolled in Medicare. If you want to sign up for Medicare, you must contact the Social Security Administration, and they can enroll you in Part A and Part B. But depending on the size of your employer, you may be allowed to delay your Medicare enrollment without having to face late enrollment penalty fees in the future. As we’ll explain now, the size of your employer impacts how Medicare interacts with your other insurance.
If Your Employer Has 20 or More Employees
If your employer insurance comes from an employer that has 20 or more employees, then you are permitted to delay your Medicare enrollment until your employment ends or you no longer receive coverage from your employer’s health insurance. Because of the size of your employer, you will not incur any late enrollment penalty fees should you decide to enroll in Medicare down the line.
The key here is that you must be actively employed for this to apply. If you are receiving retiree benefits or employer-sponsored COBRA coverage, you may not delay your enrollment in the federal Medicare program without potentially facing late enrollment penalty fees.
The law requires large employers (20 or more employees) to offer older workers the same benefits that they offer younger workers. Whether you want to remain on your employer’s group health coverage plan or switch to Medicare (or be enrolled in both) is entirely up to you.
If you do decide to keep your employer’s group coverage and enroll in Medicare at the same time, your employer coverage acts as the primary payer, and Medicare pays second. What this means is that your employer coverage will pay for all covered costs and, if there is anything left over that Medicare can cover, it will pay for the rest. If you have good employer coverage, Medicare may end up paying little to none of your health expenses, though you will still be obligated to pay for your Medicare premium(s). Just something to keep in mind.
You should be aware that if you enroll in Part B when you still have employer coverage, it may impact your ability to enroll in a Medigap plan down the line. If you don’t enroll in a Medigap plan when you are first eligible (during your first six months after you are eligible for Medicare and enrolled in Part B), you will have to undergo medical underwriting if you want to enroll in Medicare Supplement Insurance down the line. This means that you may not be able to choose the plan or get the premium rates you want.
If Your Employer Has Less Than 20 Employees
Small employers (less than 20 employees) can decide whether they want their employees to enroll in Medicare. Because of that, you must speak with your employer to find out if you have to enroll in Medicare when you turn 65.
If your employer has less than 20 employees and requires you to enroll in Medicare, your Medicare coverage becomes primary and your employer group plan pays second. This means that your group plan will only pay for medical expenses that Medicare doesn’t cover. Understand that if you have a small employer and you don’t enroll in Medicare, you could potentially be left with no coverage.
The good news is that if you have a small employer and enroll in Part B when you first become eligible, you won’t be penalized should you choose to enroll in Medicare Supplement Insurance down the line. Medigap guaranteed issue rights allow you to enroll in a Medigap plan without having to go undergo medical underwriting, as long as Medicare was your primary coverage and you do so within 63 days of your employer coverage ending.
As you can see, there are numerous factors that impact your healthcare coverage if you are still working when you reach your Medicare enrollment age. Reach out to speak with a licensed insurance agent if you have questions about your Medicare enrollment or need general Medicare advice.
