Understanding Medicare and your employer health plan – DesMoinesRegister.com
When you’re eligible for both types of coverage, you’ll need to consider the benefits and costs, and navigate an array of rules.
How does Medicare work with your group health plan?
You can generally wait to enroll in Medicare if you have group health insurance through your employer or your spouse’s employer. Most employees can’t require employees or covered spouses to enroll in Medicare to retain eligibility for their group health benefits. However, some small employers can, so contact your plan’s benefits administrator to find out if you’re required to sign up for Medicare when you reach age 65.
If you have Medicare and group health coverage, both insurers may cover your medical costs, based on “coordination of benefit” rules. The primary insurer pays you claim first, up to the limits of the policy. The secondary insurer pays your claim only if there are costs the primary insurer didn’t cover, but may not pay all the uncovered costs.
Who is the primary insurer? If your employer has 20 or more employees, your employer group health plan is primary and your Medicare coverage is secondary. If your employer has fewer than 20 employees, your Medicare coverage is primary and your employer group health plan is secondary.
Should you wait to enroll in Medicare?
Medicare Part A helps pay for inpatient hospital care as well as skilled nursing facility, hospice, and home health care. Because Medicare hospital insurance is free for most people, you may want to enroll in Part A even if you have employer coverage.
Medicare Part B medical insurance, which helps pay for physician services and outpatient expenses, requires premium payments, so it would be wise to compare the costs and benefits of Medicare to your employer’s plan. If you’re satisfied with your employer coverage, you may be able to wait to enroll in Part B.
Late-enrollment penalties typically apply if you do not enroll in Medicare Part A and Part B when you are first eligible. However, if you are covered by a group health plan based on current employment, these penalties generally do not apply as long as you follow certain rules.
Health Savings Account (HSA)
If you have a high-deductible health plan through work, keep in mind you cannot contribute to an HSA after you enroll in Medicare (A or B). However, the HSA is yours, even if you can no longer contribute to it, and you can use the tax-advantaged funds to pay Medicare premiums and other qualified medical expenses. So, it might be helpful to build your HSA balance before enrolling in Medicare.
How are Medicare claims handled?
Once you enroll in Medicare, tell your health care providers you have coverage in addition to Medicare to help ensure claims are submitted properly. You can also contact the Medicare Benefits Coordination & Recovery Center at (855) 798-2627.
Medicare rules are complex, and these are only guidelines. Different rules and considerations apply if you have retiree health coverage through your former employer (or your spouse’s employer) or other types of health coverage.
For additional information, visit www.medciare.gov.
Frank Mokosak, CFP® is a Principal and Investor Coach at Mokosak Advisory Group.