Your Medicare benefits can coordinate with your employer health plan while you are still working. If your employer has 20 or more employees, Medicare will be secondary to your group insurance. Below we’ve listed tips for you in regards to your employer group health insurance while on Medicare:
If I have group health insurance, should I sign up for Medicare Part A?
In most cases, yes. Employees of large companies can take advantage of Medicare secondary payer benefits. Your Medicare Part A benefits generally will not cost you anything if you have worked at least 10 years in the United States, and allowing Part A to coordinate with your group insurance could reduce your hospital bill in some situations when you have had inpatient hospital care.
Is there any scenario where I wouldn’t want Medicare Part A?
Yes. If your health insurance plan is H.S.A. compatible, and you wish to continue contributing into a health savings account, you cannot actively be enrolled Medicare Part A while contributing or accepting contributions into a health savings account. There are very specific rules about Medicare in regards to health savings accounts, so contact a health insurance agent to learn everything you’ll need to know.
If I have group health insurance, should I sign up for Medicare Part B?
This is a trickier decision, because Medicare Part B has a cost of $104.90/month or more depending on your income. Medicare Part B pays 80% of the cost of your outpatient services, but most group health plans already have benefits for outpatient care, and you can consider delaying Part B until you are ready to retire. You will need to evaluate whether your group health plan benefits are sufficient enough that you don’t really need Part B to pick up 80% of expenses. Let’s look at an example:
John has group health coverage, but it has a $5000 deductible. His doctor orders an MRI which costs $2000 and he is responsible for this cost since he has not yet satisfied his annual deductible. If John has only Medicare Part A, which covers hospital inpatient coverage, his Medicare is not going to help him with this expense. However, if John has Medicare Part B also coordinating with his group insurance, Part B will pay 80% of the cost of the MRI after John first satisfies the Medicare Part B deductible, which is $147 in 2013 & 2014.
Imagine yourself in this scenario. You will need to decide whether paying $104.90/month for Part B is worth having that coverage for a potential situation like this one. If your group health plan deductible is much lower, such as a $1000 deductible, then spending over $1200/year for Part B may not make sense. The choice is yours.
Should I consider electing Medicare primary and leaving my group health insurance?
You certainly have this option. You’ll need to consider how much you are paying for your employer group health insurance. If your employer pays most of the cost, and you are spending only $100/month or so for your portion of the premium, then sticking with the employer insurance as primary may be in your best interest. If however, you are spending $300/month for that same coverage, you might want to consider leaving the group plan and instead enrolling in Medicare Parts A & B with a full coverage supplement that will leave you with very little out of pocket expenses
When do I need to enroll in Medicare?
You should contact Social Security to enroll in Medicare Part A and/or Medicare Part B about 2 – 3 months before you turn 65. If you are already taking Social Security benefits, you will be automatically be enrolled in Medicare and will have to decline Part B manually if you do not want it while you are still working.
What about Medicare Part D?
Most employer group health plans include insurance for prescriptions, so if that is the case for you, you can safely wait until you retire to enroll in Medicare Part D with no penalty. Just be sure that you elect a Part D drug plan within 63 days of losing your group health insurance so that there are no late enrollment penalties incurred.
Remember these rules are for employees who work for companies with 20 0r more employees. If you work for a smaller company, Medicare will be primary to your group insurance, and we’ll address that in another blog post.
Have further questions? Contact a licensed agent at Boomer Benefits to evaluate your situation today.