Medicare and Employer Coverage
Medicare and employer health coverage are two primary sources of health insurance for many Americans. Understanding how these two types of coverage interact is crucial for maximizing benefits and ensuring that healthcare needs are comprehensively met.
Things to keep in mind:
If you are currently actively employed with an employer who has 20 or more employees, and are covered under that employer’s insurance, you can likely delay Medicare past 65 without a penalty as long as the coverage offers at least as much coverage as Medicare.
If you work for an employer with fewer than 20 employees and are covered under the employer health plan, then Medicare will be primary, and the employer plan will be secondary.
COBRA and Retiree coverage does not count as credible coverage. If you are on COBRA
Coordination of Benefits
When an individual is eligible for both Medicare and employer health coverage, coordination of benefits determines which insurance pays first. This depends on several factors, including the size of the employer and the individual's employment status.
Medicare as Primary Payer
Medicare is the primary payer in the following situations:
Employer Coverage as Primary Payer
Employer coverage is the primary payer in the following situations:
Making Enrollment Decisions
Deciding whether to enroll in Medicare while having employer coverage depends on several factors, including current health needs, costs, and future plans.
Enrollment in Medicare Part A
Most individuals choose to enroll in Medicare Part A when they first become eligible, as it usually does not have a premium if the individual or their spouse has paid Medicare taxes for at least 10 years. Enrollment in Part A can serve as secondary coverage to employer insurance.
Delaying Enrollment in Medicare Part B
Individuals with existing employer coverage may delay enrolling in Medicare Part B to avoid paying the premium, especially if the employer coverage is comprehensive. However, it is important to understand the implications of delaying Part B enrollment, as it may affect future coverage and lead to penalties.
Medicare Part D and Employer Prescription Coverage
If the employer coverage includes prescription drug benefits that are considered "creditable," meaning they are at least as good as Medicare Part D coverage, the individual can delay enrolling in Part D without penalty. However, it is crucial to receive and keep records of the creditable coverage notice from the employer.
Special Enrollment Periods
Individuals who delay enrolling in Medicare due to having employer coverage can qualify for a Special Enrollment Period (SEP) when their employment or employer coverage ends. This SEP allows them to enroll in Medicare Part B and Part D without facing late enrollment penalties.
Impact on Spouses
The coordination of benefits between Medicare and employer coverage also affects spouses. If the working spouse has employer coverage and the other spouse is eligible for Medicare, the employer plan may cover both individuals. The coordination rules will depend on the size of the employer and the Medicare eligibility of each spouse.