In past blog posts, I have spoken a lot about all the different coverages included in Original Medicare. I have also written at length about the variety of Medicare supplement plans, Medicare Part D prescription drug plans, and Medicare Advantage plans that are available to people age 65 and over. We all know how confusing the health care industry can be, and now I am going to throw one more type of policy into the mix—group health insurance.
One of my biggest priorities is still to help make insurance less confusing, not more, so don’t be too intimidated by the prospect of this new information. Medicare combined with a group health insurance policy is not nearly as overwhelming as it sounds.
Please keep in mind, however, that these scenarios apply only to Medicare Part B. Anyone who is eligible for Medicare Part A is free to enroll with no effect on other insurance, as Part A is not associated with any out-of-pocket expenses.
When Is Medicare Combined With a Group Policy?
When you have reached the age of 65 (or it is three months before your birthday) and are still working, you may be covered by either a small or large group health insurance policy through your employer. When this happens, you can be covered by both types of policies. Which policy pays first—Medicare or your group policy—depends on the type of group employment policy you have.
Small group insurance—If you are currently covered by a small group insurance plan (one that employs 20 or fewer people), your Medicare can still be used. Medicare Part B will be the first payer and your small group health policy will be the secondary payer. This simply means that any insurance claims will be billed to Medicare before they are billed to your small group health plan.
• Large group insurance—Large group plans are those that cover 50 or more employees. When you are enrolled in a large group insurance plan, again you are still eligible for Medicare. However, with large groups, the health plan is the first payer and Medicare is relegated to second payer.
Do I Have to Maintain Both Policies?
Whether you decide to keep both your Medicare coverage and your group insurance policy is going to depend on several different factors. If you are enrolled in small group coverage, Medicare is the primary payer. Therefore, you need to enroll in Medicare as soon as you are eligible to do so.
When you are enrolled in large group health coverage, which is the primary payer, you will have to weigh the benefits of your current coverage and those of Medicare. Medicare Part B premiums run the average person just under $105/month (if you are in a higher income bracket, your premiums will be higher). So, if you pay more than that for your group coverage, you may want to opt out of your group plan.
When you are looking at the figures, you need to take into account any Medicare supplement plans you might purchase, such as a Medicare Part D prescription drug plan. These will add to the premium you will pay for Medicare Part B.
Most people find that it is still less expensive to drop the large group health insurance. With either a Medicare supplement plan to help defray some of the expenses of Medicare, or with a Medicare Advantage plan that takes the place of Medicare, your monthly costs may be less.
Are There Other Considerations?
The biggest consideration for you is going to be the overall cost involved. Only you can determine whether it is more cost effective to opt for a combination of Medicare and Medicare supplement plans (or a Medicare Advantage plan that takes the place of Medicare and any supplemental policies) or to continue to use your large group health plan.
However, you also need to consider whether your decision to opt out of your group health plan is going to leave your spouse without insurance. As you know, if you are not covered under your employer’s plan, your spouse will be left without health coverage. If you are both eligible for Medicare, this is not going to be an issue. If your spouse is under the age of 65, you will need to consider Cobra or another health plan.
Things to Keep in Mind
Regardless of whether you continue on your group plan or stick with Medicare only, you do need to make sure of several things. Most importantly, you need to make sure that you have comparable coverage if you choose Medicare (including supplements) over your large group health plan. For example, Original Medicare does not include prescription drug coverage, so you will need to purchase a Medicare Part D prescription drug plan.
Also, if you choose not to enroll in Medicare when you are 65 and are instead opting to keep your large group health coverage, keep in mind that you will be eligible for a special enrollment period when you retire. This is good to remember when your 65th birthday is approaching and you start receiving notifications from Medicare that it is time to enroll.
Who Can Help Me Understand My Options?
The team at MediGap Advisors is available to help you research your health insurance options and decide which course of action is the best for you to take. Our services are completely free, as we are committed to helping people save money on their health care whether they are our clients or not.
Please give us a call at 866-323-1441 to discuss how Medicare and your group health insurance work together.
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.