Medicare and Employer Coverage
If you’re 65 or older (or soon-to-be 65) and will have Medicare AND employer coverage because you’re still working, you’ll have some things to consider.
Many people have the option to keep their employer insurance, and Medicare coordinates benefits with that coverage. But it’s not a bad idea to compare the cost of your employer insurance to what it would cost you to accept Medicare as your primary coverage.
By doing some research, you can decide which option is more affordable for you, and it’ll help you avoid late enrollment penalties for Medicare. If you’re 65 or older, keep reading for more information about Medicare and employer coverage.
Note: Employee health coverage is also called a group health plan.
What You Need to Know
People over 65 who currently get group health plan coverage from their employer are also eligible for Medicare.
In most cases, Social Security recommends taking out Part A only and delaying Part B until you retire — unless you have an Employer HSA Plan. Taking Part A can cause tax implications.
Also, you can use Medicare AND a group health plan to pay for the most necessary medical needs and services.
Start with a Cost Analysis
You CAN have private insurance and Medicare, but there are a lot of variables to weigh. Making these decisions requires some cost analysis between the Medicare costs and the copays, deductibles, and costs of your group coverage. Midwest Trusted Benefit can guide you through this and suggest which way to go. For example, we’ll tell you if it makes sense for you to stay on your employer insurance plan.
How Your Current Coverage Works with Medicare
Here are three everyday situations that you may fall under:
Situation 1: You Have Employer Coverage and You’re Turning 65
If you’re not benefiting from Social Security at least four months before you turn 65, you’ll enroll through Social Security to get Original Medicare (Parts A and B).
But, depending on the employer’s size, you might be able to delay A and B without penalty if you sign up later.
Situation 2: You Have Employer Coverage and You’re Over 65
In most cases, you don’t have to do anything until you or your spouse retire or drop the employer insurance.
If you didn’t sign up for Medicare when you were first eligible, the company’s size dictates whether you’ll pay a fine if you enroll later.
Situation 3: You Have Employer Coverage, You’re Under 65, and Have a Disability
In most cases, you don’t have to do anything until you or your spouse retire or drop the employer insurance.
If you didn’t enroll in Medicare when you were first eligible, the company’s size dictates whether you’ll have to pay a fee if you register later.
If the Company Has Less Than 20 Employees
Medicare is typically the primary payer if your employer has less than 20 employees. However, if the company you work for is part of a group health plan — with other employers with over 20 employees — then Medicare becomes the secondary payer.
If the Company Has 20 or More Employees
Medicare is typically the secondary payer if your employer has 20 or more employees. In this scenario, your group plan is the “primary” payer, and Medicare will pay out after your employer coverage has paid their share.
Small Employer: <20 Employees | Large Employer: 20+ Employees |
Medicare is primary if you’re 65 or older and your employer has less than 20 employees. | Medicare is secondary if you’re 65 or older, your employer has more than 20 employees, and you’re actively working.
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These rules apply to common circumstances and could change depending on your situation. For questions about whether Medicare will be primary or secondary, call (402) 740-5505 to speak with an agent.
What Happens When Your Employment Coverage Ends?
As soon as the employment or your employer/union insurance ends, the following happens:
- You might be able to get COBRA coverage, which retains your health insurance (for 18 months, usually) through the employer’s plan and likely at a higher cost.
- You have eight months to enroll in Medicare Part B without a fee — whether you choose COBRA or not. If you do pick COBRA, don’t wait until this ends to sign up for Part B.
- If you already have COBRA when you sign up for Medicare, your COBRA will likely end. If you qualify for COBRA after you’re enrolled in Medicare, you have to be allowed to take COBRA. It’ll be secondary to Medicare unless you have ESRD.
Does Having Medicare and Employer Benefits Impact Spouse’s Coverage?
While Medicare doesn’t include coverage for dependents or spouses, most group health plans have a coverage option for them.
However, know that Medicare coverage is only given to the beneficiary. So if the employee of the group plan gets Medicare and employer benefits, Medicare only covers that employee.
There are also separate eligibility rules for spouses of Medicare beneficiaries.
Need Help with Medicare and Employer Coverage?
It’s critical to understand how your current insurance works with Medicare. If you have questions about your current coverage, Midwest Trusted Benefit is an excellent source of information. Contact us online or call (402) 740-5505!
