Why Medicare is Primary for Small Employers

Why Medicare is Primary for Small Employers

Turning 65 But Still Working; What To Do?

In this day and age more eligible Medicare Beneficiaries are choosing to continue working and they are confused about what they should do when reaching age 65. Why Medicare is Primary for Small Employers

In some cases, Medicare Beneficiaries can postpone their Medicare Part B and continue on their group coverage. Other times, these individuals will need to go ahead and pick up their Medicare Part B to stay on their employer’s group plan.

If you find yourself in this situation, take heed, there are a few things you need to know in order to be certain you are making the right decision for yourself, and not subjecting yourself to a potential penalty.

Should You Enroll in Part B or Delay it?

The number of employees your company has in their workforce will be the determining factor. If your employer along with all of their subsidiaries (if any), has more than twenty employees then your employer’s group health plan will be primary and Medicare secondary.

Naturally, in this case you will not be required to start your Medicare Part B and you will not incur a penalty for delaying enrollment. You should, however, check with your employer’s benefits administrator before you elect to delaying your Medicare Part B enrollment.

You will want to ensure that your employer coverage is considered creditable for Medicare Part B and/or Part D. If it is not you will need to pick up Medicare Part B and/or Part D to avoid a penalty.

If your employer and any subsidiaries has 20 employees or less, Medicare Parts A and B will be your primary coverage. What this means for you is that if you delay enrollment into Medicare Part B you will receive a Part B penalty of up to 10 percent for every consecutive 12 month period you do not have creditable coverage.

Medicare is Primary Means What?

When Medicare is primary it means Medicare is the first to pay and your employer coverage will pay after Medicare pays its portion. You will be responsible for any amount not covered after Medicare pays their portion and your employer’s group plans pays their portion.

Just as an example, when you go to the doctor you will be subject to Medicare’s deductible and the 20% left over. Your employer plan make pay all or part of those costs.

Keep in mind the employer coverage you have after turning age 65 may not be the same coverage that you had prior to being 65. Check with the benefits administrator from your employer to discuss what changes will be occurring to your current employer sponsored health coverage.

Which is Better, Employer or Medicare Coverage?

One of the biggest concerns when investigating policy benefits should be prescription drug coverage. Normally, employer plans do not have a gap in prescription drug coverage.

However, nearly all Medicare Advantage Plans that contain prescription drug coverage and all Medicare Prescription Drug Plans include a coverage gap. You may have heard the term “donut hole” used to describe the prescription drug coverage gap that impacts Medicare Beneficiaries.

Due to the new Bipartisan Budget Act of 2018, the coverage gap is closing in 2019, for brand name drugs. Nevertheless, the cost of prescriptions drugs during what was previously known as the coverage gap, will still increase just not as drastic as before.

Before making a decision, review your medical and prescription drug options and evaluate the benefits and risks of each choice. This determination will require you to ponder and decide for yourself.

Everyone’s situation is a bit different, needs and budget will vary from person to person. Comparing employer coverage versus Medicare as primary, it is not possible to say one is better than the other.

The way Medicare Plans are rated in your state should be another factor in your deliberations. You’re in an “issue age” state in you’re a resident of Florida. The closer you are to age 65 when enrolling in a Medicare plan will ensure a lesser price on your supplement plan for the lifetime of that coverage. Most states are not “issue “age”.

It does not matter what age rating is used in your state of residency, chances are you will still receive annual rate increases.

What About My Situation?

If you work for a small company that has a group health plan, and your employer has less than 20 employees, Medicare will usually pay first. However, Medicare would usually pay second if both of these apply to your situation:

  • Your employer joins with other employers or employee organizations (like unions) to sponsor a group health plan(called a multi-employer plan)
  • Any of the other employers have 20 or more employees

Your employer’s group health plan could ask for an exception. Even if your employer has less than 20 employees, you’ll need to check with the employer’s benefits administrator to find out if Medicare pays first or second.

If the employer has more than 20 employees, the employer sponsored group health plan will usually pay first. Always confirm with the benefits administrator.

Employers that have 20 or more employees are required to offer current employees that are 65 and older the same health benefits that they were entitled to when they were under 65, with the same conditions.

If the group health plan offered coverage to significant others, they must offer the same coverage to significant others aged 65 and older that they offer to significant others under the age of 65.

What About Claims?

If the employer sponsored group health plandidn’t pay the full cost of your bill, your doctor or health care providershould forward the bill to Medicare for an additional (secondary) payment.

Medicare will pay based on what the group health plan paid already, and what the doctor or health care provider charged. You’ll be responsible for any additional costs not covered by Medicare or your employer sponsored group health plan.

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About the Author

Jagger Esch

Jagger Esch is the President & CEO of Elite Insurance Partners and MedicareFAQ, a senior healthcare learning resource center. As a young entrepreneur and seasoned insurance expert, he has a passion for helping people. Since the inception of his first company in 2012, he has been dedicated to helping those eligible for Medicare by providing them with resources to educate themselves on all their Medicare options. Jagger lives in the Florida sunshine state and loves boating with his family on the weekends.

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Jagger Esch
Medicare Expert

Jagger Esch is the President & CEO of Elite Insurance Partners and MedicareFAQ, a senior healthcare learning resource center. As a young entrepreneur and seasoned insurance expert, he has a passion for helping people. Since the inception of his first company in 2012, he has been dedicated to helping those eligible for Medicare by providing them with resources to educate themselves on all their Medicare options. Jagger lives in the Florida sunshine state and loves boating with his family on the weekends.

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