Your Original Medicare benefits will coordinate with your benefits from your employer group health plan while you are still actively working. If your employer has 20 or more employees, then Medicare will be a secondary payer after your group insurance. It’s up to you whether you enroll in Part A or B or both to coordinate with your group coverage.
Here are some of the most common questions we receive about group coverage and Medicare.
Questions about Group Health Medicare
If I have employer health insurance, should I still sign up for Medicare Part A?
In most cases, yes. Employees of large companies can take advantage of Medicare secondary payer benefits. Your Part A benefits will cost nothing if you have worked at least 10 years in the United States. Allowing Part A to coordinate with your group insurance could reduce your hospital bill in some situations. The main exception to this is if you have a Health Savings Account. Read more on that next.
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 that account, you cannot be enrolled in any Part of Medicare. There are very specific rules about Medicare in regards to health savings accounts. Read our blog post about this, and if you have more questions, don’t hesitate to reach out to us for guidance.
If I have group health insurance, should I sign up for Medicare Part B?
This depends on the size of your employer. If you are 65 or older and have a larger employer with 20 or more employees, you can delay Part B without penalty. If you work for a small employer, then Medicare is primary and you need to enroll in Medicare Part A and B when we first become eligible for Medicare.
Now, if you are in the large employer decision, it’s up to you if you want to enroll in Part B. Some people want to enroll in it alongside their group health coverage for the extra coverage. However, Medicare Part B has a base monthly cost of $104.90 – $134/month depending on when you enrolled in Medicare. (Some people also pay an additional monthly amount for Part B based on higher income. See charts on our Medicare costs page for more details.)
Medicare Part B pays 80% of the cost of your outpatient services, but most group health plans already have benefits for outpatient care. This means you can consider delaying Part B until you are ready to retire so that you can avoid paying those monthly premiums.. 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.
For someone with low medical usage, it doesn’t make sense to pay Part B premiums. However, if you have alot of medical usage, Part B may help to defray some of those expenses as your secondary payer. The decision will be up to you.
Medicare Secondary Payer rules for group health Medicare are complicated, so check with your group benefits specialist for guidance.
Should I consider electing Medicare primary and leaving my group health insurance?
Definitely. 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 keeping 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. Coverage of this kind will leave you with very little out of pocket.
Also, in the case of covering spouses, we often find that is cheaper for the spouse to go on Medicare as primary than to stay on the employer plan. This is because many employers don’t contribute toward the cost of spousal insurance. If carrying your spouse on group health coverage costs you hundreds of dollars each month, then Medicare and a supplement or Advantage plan can often save you quite a bit.
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 that is as good as or better than Part D. This is called creditable coverage. If that is the case with your employer plan, you can safely wait until you retire to enroll in Part D. Just be sure that you elect a Part D drug plan within 63 days of losing your group health insurance. This will ensure you avoid a late penalty.
Some employer have high deductible health plans though, and these occasionally may not be as good as Part D. That’s considered non-creditable, which means you’ll owe a penalty later on for not enrolling in Part D when you were first eligible. Your employer must notify you if it’s coverage is non-creditable.
Remember these rules are for employees who work for companies with 20 or more employees. If you work for a smaller company, Medicare will be primary to your group insurance, and you should enroll in both Medicare Parts A & B. Check out our blog post for people with small employer insurance here.
Get Help Analyzing Medicare vs Group Health Coverage
If you find this too confusing to tackle on your own, contact a licensed agent at Boomer Benefits. We can help to evaluate your situation today. We have run thousands of analyses like this and can help you decide which route to go.