More and more, baby boomers are hitting that magic age of 65. One result is that employers are frequently asked by employees if they need to enroll in Medicare coverage if they plan to keep working and are covered by the employer’s medical benefits. While everyone always wants the simple 'yes' or 'no' answer, the appropriate response to the question is not always simple, and there are a lot of 'it depends' scenarios. Here are some of the details to consider.
Medicare Part A is free to members who have worked at least 40 quarters (10 years) and paid Medicare taxes, so it is recommended that Part A is taken when members are eligible. Part A covers allowable hospital expenses, limited home health care, hospice care, and skilled nursing in some situations.
Medicare Part B requires a monthly premium. There are also significant Part B penalties that will apply for late enrollment (e.g. if you are not covered when initially eligible or after the employer sponsored coverage is terminated). Part B covers certain doctors' services, outpatient care, medical supplies, and preventive care services. If the employer providing the group health coverage has less than 20 employees, the health plan may require members to enroll in Part B, or employees may want to enroll anyway. Under federal guidelines, Medicare is the primary insurer and the group plan pays secondary when employers have less than 20 employees (without the primary insurer paying, the secondary insurer will pay very little or even nothing at all). If the employer has more than 20 employees, Medicare is the secondary insurer. Since there is a premium associated with Part B, it might not provide a financial benefit to enroll with the group plan.
Medicare Part D provides prescription drug coverage and also requires a premium. It is voluntary coverage, but if the member does not have a creditable prescription drug policy through an employer sponsored plan and is a late enrollee in Medicare Part D, significant late entrance penalties will apply. Employers are responsible for providing notifications every year to Medicare eligible members stating if their prescription drug plan is creditable or non-creditable and also reporting this information on the Center for Medicare Services (CMS) website. A prescription drug plan is considered creditable if it provides coverage at least as comprehensive as a standard Medicare stand-alone Part D prescription plan.
Members also typically have the option of waiving the group health insurance coverage and opting for Medicare Parts A, B, and D and a Supplement or Advantage plan. These plans can sometimes provide better benefits (i.e. lower or no deductibles, co-pays, co-insurance, health club memberships, vision, and dental care) than the employer plan at a reasonable cost. Members who plan to keep working and have employer sponsored coverage but are considering moving to Medicare and a Supplement/Advantage plan may also want to think about their dependents covered on the employer sponsored plan and what would happen to their coverage if the employee waives the group coverage.
There are additional scenarios and situations for members covered by TRICARE, Veterans, Retiree Coverage, and so on, and it is recommended members visit Medicare.gov for additional information or contact their local Social Security Administration (SSA) office.
Medicare education and information is another way Human Capital Management (HCM) software can help Human Resources answer questions and provide resources through an Employee Self Service (ESS) portal. Key reference documents can be stored on the site, as well as the Medicare Part D Creditable/Non-Creditable compliance notifications, for employees to access at their convenience. Links to important web-sites like CMS, the local SSA office, and contact information can also be made readily available.
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