If you’re turning 65 soon (or you’re 65 +) and will have both Medicare and Employer coverage because you’re still working, you have many things to evaluate.
You can have private insurance and Medicare simultaneously, but there are many elements to consider. Making these decisions involves some careful cost analysis between the expenses for Medicare and the cost, copays, and deductibles of your group coverage. An agent at Cornerstone Senior Advisors can guide you through all of this and advise you on what you should consider. If it seems logical for you to remain with your employer coverage, we’ll be upfront with you.
The information below is for Medicare beneficiaries age 65 or older.
Active Employer Coverage
If you’re still actively working (meaning you’re not retired or on COBRA), you can stay on your employer’s group health insurance plan if you want. Your Medicare benefits can accommodate that coverage. How it accommodates depends on the size of your employer.
If your group health coverage is through your spouse’s employer, these same rules apply.
Large Companies 20+ Employees
If your employer has over 20 employees, then that employer coverage is primary and Medicare will be secondary. In this case, your group plan pays first, and Medicare pays second.
Most employees with group coverage enroll in Part A since it’s premium-free if you’ve worked at least ten years. Part A can adjust to lower your expenses if you have a hospital stay. If you’re contributing to a health savings account (HSA) and intend to continue doing so, don’t enroll in Part A. Read more on this exception below.
Part B works differently in that it costs money. You’ll pay a monthly premium based on your income. Some people choose to delay enrollment for Medicare Part B and Part D which saves them the premiums they would’ve paid. Since your employer coverage already contains outpatient benefits, it may not be useful to pay those Part B and Part D premiums.
When you delay Part B, your large group plan is treated as creditable coverage — meaning you can enroll in Part B without a late penalty when you choose to retire.
You Can Choose Medicare as Your Primary Insurance
You can also leave your group health plan and pick Medicare as your primary insurance, and then add a Medigap plan. This is often a cheaper option for you or your spouse, and it will reduce your deductible spending and remove all doctor copays.
To determine whether this is cost-effective for you, you’ll need to factor in your plan deductible, copays and your medication usage. Plus, it will depend on how much your employer coverage affects your monthly payroll deductions.
Your Cornerstone Senior Advisors agent can help you determine if you should enroll in Part B now or later.
Small Companies Under 20 Employees
On the flipside, if your employer has under 20 employees, then Medicare will be primary and the employer coverage will be secondary. Medicare will pay first and your group coverage will pay secondary, so you’ll need both Parts A and B.
The HSA Exception
HSA-compatible health plans are one exception on either large or small employer coverage. If you have a high deductible health plan and you sign up for Medicare, you can no longer contribute to your health savings account (HSA). In fact, you can’t contribute to an HSA if you have any part of active Medicare, nor can you accept any contributions from an employer.
If you work for a small employer, you have to enroll in Part A and Part B at 65 to avoid tax penalties. This means that if you intend to keep your HSA-qualified employer coverage, you’re required to stop contributing into the HSA. But your spouse can still contribute if he or she is covered on your group plan and isn’t enrolled in Medicare yet.
For all your Medicare questions, reach out to a licensed insurance agent at Cornerstone Senior Advisors. Call us in Wichita, KS at (316) 260-3331!