Medicare & Employer Coverage
If you are 65 or older (or will be soon) and will have both Medicare and employer coverage because you are still working, consider a few things. You may be able to keep your employer-sponsored insurance, and Medicare will work with it. You should also compare the cost of that employer’s coverage to the cost of switching to Medicare as your primary insurance.
Doing your research will help you decide on which coverage option is most cost-effective. It can also help you in avoiding any Medicare late enrollment penalties. This information is only for beneficiaries who are 65 or older. Medicare coordination rules for people under 65 who are on Medicare due to a disability are different.
If you have active employer coverage, it means you are still working and not retired. You have the option to stay on your employer’s group health insurance plan in this situation. That coverage and your Medicare benefits can work together. The manner in which it is coordinated is determined by the size of your company. If you have group health insurance through your spouse’s employer, the same rules apply.
If you are 65 or older and your employer has more than 20 employees and you are still working, Medicare is secondary (not a retiree or on COBRA). Medicare Secondary Payer is the term for this situation. In this situation, your group plan pays first, followed by Medicare.
Most active employees with group coverage enroll in Part A because it is premium-free after ten years of service. If you have to stay in the hospital, Part A can help you save money. Take, for example, a $3,000 deductible on your employer’s health plan. In 2021, the Medicare Part A hospital deductible will be $1,484. If you have both your employer’s insurance and Part A, and you need to go to the hospital, you’ll only have to pay $1,484 for inpatient hospital services. The rest of any Part A services are covered by Medicare.
It doesn’t always work the same way with Part B, and Part B is more expensive (see next section), so most people only use Part A when they work for a large company. If you currently contribute to an HSA and plan to continue doing so, there is an exception. Do not enroll in Part A if this is the case.
If you are 65 or older and your employer has fewer than 20 employees, Medicare is your primary insurance. You’ll almost certainly need both Parts A and B, because Medicare will pay first, and your group insurance will pay second. Some insurance companies will cover claims even if you don’t have Part B on your policy. Don’t fall for it. You run the risk of that insurance company changing that without warning at any time, leaving you responsible for all of the expenses that Part B would normally cover. It’s not worth the risk; if your company has fewer than 20 employees and Medicare will be the primary payer, we recommend enrolling in Parts A and B.
If your group plan includes prescription benefits, as most do, you may be able to postpone enrolling in a Part D drug plan without penalty. Make sure you compare prices. It is sometimes less expensive to drop your group insurance and instead enroll in a Medicare supplement as a secondary plan.
So, can you have both private and Medicare insurance? Yes, but there are several considerations to weigh. All of these decisions require careful cost comparisons between Medicare costs and your group coverage’s costs, copays, and deductibles. Our Medicare-certified agents are happy to talk through these factors and advise the path forward that will be the best value for you. Feel free to contact us or schedule an appointment using our online booking system.