Understanding Medicare and Employer Coverage/COBRAApril 2, 2019
In 2019, there are more older people continuing their career after age 65 than ever before. In 1985, senior Americans made up 11% of the workforce, but today that number is as high as 20%. If you are nearing 65 and wondering how your job impacts your Medicare options, look no further! Here is everything you need to know about Medicare and employer coverage.
Active Employer Coverage
If you are 65 (or soon-to-be 65) and have employer health coverage, you’ll have the option to keep your current coverage or enroll in a Medicare plan. It’s important that you understand the different coverage options available to you so you can compare and find the most cost-effective alternative.
Can I keep my employer health insurance with Medicare?
Yes. If you are actively working, you have the right to remain on your employer’s coverage plan even if you are eligible for Medicare. If you choose to keep your employer plan, your Medicare benefits can coordinate with your current coverage.
If your company has more than twenty employees, Medicare is secondary. This means that your group plan will pay first, and then Medicare. Part A can coordinate with your employer plan to lower your costs regarding a hospital stay. Most working seniors should enroll in Part A regardless of other coverage because it will be premium-free if you have worked for at least 10 years. Part B is not premium-free, and you will pay a monthly premium based on your income. You can choose to delay enrolling in Part B if you prefer. You can avoid Part B (or Part D, prescription drug plan) late penalties by showing a creditable coverage letter (proof of last coverage) when you enroll at a later date.
If your company has less than twenty employees, Medicare is primary. This means that Medicare will pay first, then your group plan. When Medicare is primary, you need to enroll in Medicare Part A and B. You can delay enrolling in a Part D plan (prescription drug plan) and avoid a late penalty fee if your group plan has prescription coverage. However, it is important to compare costs because it can be cheaper to leave your group plan and enroll in a Medicare Supplement plan as your secondary coverage instead. These plans are a great way to help pay for your copayments, coinsurance, and deductibles.
Can an employer pay for Medicare supplemental insurance?
Your employer generally does not pay for any of your Medicare premiums. However, your employer can set funds aside for you to use towards health coverage. This is done through a form called “Section 105 Medical Reimbursement Plan” and is a tax-free reimbursement of your medical and other health expenses.
Some employers may prefer to pay for a Medicare Supplement plan for you because carrying an employee over the age of 65 on a group health plan can be expensive. Plus, you may be able to get more comprehensive coverage through a Medigap plan, like the popular Plan G, instead of your employer or union plan.
Do I need Medicare if I have employer insurance?
The short answer is “maybe.” If you are about to turn 65 and have health coverage through your employer (or your spouse’s employer), you should talk with your benefits administrator and find out if you’re required to enroll. If your employer doesn’t require you to sign up for Medicare, you don’t have to. Instead, you can sign up when you retire or otherwise lose your employer’s coverage during a temporary Special Enrollment Period (SEP). As long as you enroll during your temporary SEP, you can avoid any late-enrollment penalties. These penalties typically result in a higher monthly premium as a result of postponing enrollment.
Can I work full time while on Medicare?
Yes, you can work full time while on Medicare. As we mentioned above, your Medicare and employer coverage will differ depending on your company size. If you have specific questions for your unique situation, click here.
What benefits are not included in employer coverage?
Your employer coverage can differ depending on your group plan. Some employer group plans may cover dental, vision, and hearing coverage, but these benefits can also be found in a Medicare Advantage plan. MA plans also offer benefits like group fitness classes, meal delivery, and transportation. If you’re interested in learning more about an MA plan or looking to enroll, click here.
Employer Union Coverage
Employer union coverage is a bit different than employer coverage. Your employer or union should let you know if your coverage will continue once you turn 65. You should contact your group coverage provider to get more detailed information.
Medicare COBRA Qualifying Events
COBRA is a continuation of coverage for someone who is no longer part of a company or union. Under COBRA, an employee has the option to continue group coverage for a limited amount of time, however, it is generally at your own expense.
If you enroll in Medicare BEFORE you become eligible for COBRA, you can keep your COBRA coverage. If you are not yet eligible for Medicare when you get COBRA, your COBRA coverage will end on the day that you become eligible for Medicare.
*Additionally, gaining or losing a job with health coverage is considered a qualifying event for you to have a Special Enrollment Period (SEP), but you do not have a SEP once your COBRA coverage ends.
Can you have both Medicare and COBRA?
It is possible to have both Medicare and COBRA if you already had Medicare when you became eligible for COBRA. In that case, Medicare will pay first, but you can use COBRA for additional costs.
If you are under 65 and on COBRA, you must enroll in parts A and B as soon as you become eligible. Failure to do so can result in a late enrollment penalty fee.
Find Your Best Coverage Option
If you are nearing 65 and still have health coverage through an employer, we want to help! Medicare and employer coverage can be confusing, and we understand that all situations are unique. Our licensed agents want to make sure you’re enrolled in the best coverage for your needs and budget. Plus, they are contracted with all the major carriers so they can help you enroll with an unbiased approach. They can help answer any questions about employer coverage, Medicare Advantage plans, Medigap, prescription drug coverage, and so much more! Click here to get in contact with a licensed agent or give us a call at 833-438-3676.
This blog was originally published on 11/30/17, but was updated on 4/2/19 and again on 7/11/19.