By Wiley Long
President
MediGap Advisors

How Medicare Works with Employer-Based Coverage

Newsletter Issue #7

                                                                                   

Over the past few months, I’ve explained how Medicare alone leaves you at financial risk and how a Medicare Advantage plan or Medicare supplement plan can significantly reduce this risk and minimize your out-of-pocket expenses.

Last month I talked about how to choose between a Medicare supplement, and a Medicare Advantage plan. But what if you decide to continue working beyond age 65 and your employer offers health insurance?

Should I Keep My Employer-Based Coverage?

Things can get a bit tricky once you start factoring in employer-based coverage, so I’ll break down your choices here.

Once your Medicare initial enrollment period begins, you’ll have to decide if you want to sign up for Medicare Part B and/or keep your employed-based coverage. Keep in mind that Medicare Part A (inpatient hospital coverage) is free - there is no premium. If you choose to work beyond age 65, you’ll want to consider:

  • Do I have a spouse that needs continued medical coverage?
  • Do I have dependents that need continued medical coverage?
  • What is the premium for my employer-based coverage versus my Medicare Part B premium
  • Does my employer-based coverage offer more extensive benefits than Medicare Part B?

Why Signing up for Medicare Part B May Not Be A Choice at All

If you continue working, deciding whether or not to sign up for Medicare Part B may not be your choice at all. If you work for a company that has less than 20 employees and have employer-based coverage, you’re required to sign up for Medicare Part A and Part B. Medicare will become your primary insurance carrier, and your employer-based coverage will become your secondary insurance carrier.

If your company has over 20 employees and you decide to keep your employer-based coverage and sign up for Medicare Part B, your employer-based coverage will become your primary insurance carrier, and Medicare Part B will become your secondary insurance carrier.

How Will My Medicare Decision Affect Other Family Members?

If you have a spouse that doesn’t yet qualify for Medicare and/or a dependent who still requires health coverage, you’ll want to think twice before dropping your employer-based coverage and signing up for Medicare. You can, however, choose to keep your employer-based coverage AND sign up for Medicare Part B. You’ll have to pay both premiums, but this will ensure your entire family remains covered.

If only you need insurance coverage and you’re not required to sign up for Medicare Part B (your company has more than 20 employees), you’ll want to compare your Part B premium to your employer-based coverage premium and compare benefits to see which plan would be best for you (of course you also have the choice to keep your employer-based coverage AND sign up for Medicare Part B - you just have to pay both premiums).

Penalties for Delaying Medicare Part B

The government takes Medicare coverage very seriously, and not taking appropriate action could cost you - for the rest of your life! Let’s make sure you don’t have to pay the government any more than you absolutely have to!

If you don’t have employer-based coverage and choose not to sign up for Medicare Part B or your employer-based coverage ends and you don’t sign up for Medicare Part B during your special enrollment period, you will be penalized. There’s a 10 percent penalty added to your premium for every 12 months that you delay signing up - and that penalty lasts your entire life and never goes away.

You can choose to delay signing up for Medicare Part B until you stop working or sign up any time while you’re still working without penalty. At that time, you qualify for an 8-month special enrollment period to sign up for Medicare Part B or a Medicare Advantage plan. You can also sign up for a Medicare supplement plan at that time.

Should you lose your job and your health coverage, you also qualify for an 8-month Medicare special enrollment period.

MediGap Advisors Aims to Make Medicare Easy to Understand

I know - the choices seem endless when it comes to Medicare. That’s why my mission at MediGap Advisors is to break things down for you to make them easy to understand and explain your choices in detail. My goal is to help you save as much money as possible. It’s important that you know what your choices are and that you have the tools necessary to make an informed decision.

Before you make any definite choices, our Personal Benefits Managers are available to answer any questions you might have regarding your health insurance options - don’t feel like you have to travel this path alone! And we’re not letting the fun stop here - next month I’ll have everything you need to know about Medicare prescription plans.

Best regards,

Wiley P. Long III
President - MediGap Advisors