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Medicare and Employer Health Care

If you are 65 or older, working and have an employer group health plan based on your current employment, you may have questions about how job-based insurance coordinates with Medicare.

Here is what you need to know:

For people who work and have job-based insurance, knowing when to enroll in Medicare mainly falls into their responsibility.

There is no formal notification from the Social Security Administration or Medicare. Some people are misinformed by employers or do not have reliable information about Medicare enrollment, leading them to delay enrollment in Medicare Part B and then incur penalties and high medical expenses.

The Rules:

Having job-based insurance does allow you to delay Medicare enrollment without penalty and delay paying the Medicare Part B premium (the standard Medicare monthly Part B premium for 2020 is $144.30).

However, it is important to know whether your job-based insurance will pay primary or secondary to Medicare.

In most cases, you should only delay enrollment in Medicare if your job-based insurance is the primary payer (meaning it pays first for your medical bills) and Medicare is secondary.

There are additional enrollment considerations if:

• you have a Health Savings Account (HSA); 
• you enroll in Medicare Part A and/or Part B
• you can no longer contribute to your HSA

Job-based insurance is primary...

if it is from an employer with 20 or more employees. Medicare is secondary in this case, and some people in this situation choose not to enroll in Medicare Part B so they are not obligated to pay the monthly premium.

Job-based insurance is secondary...

if it is from an employer with fewer than 20 employees; Medicare is primary in this case. If you work at an employer this small and delay Medicare enrollment, your job-based insurance may provide little or no coverage. This is why you should enroll in Medicare Part B to avoid incurring high expenses for your care.

The rules are different, however, if you are Medicare-eligible due to a disability or because you have End-Stage Renal Disease (ESRD).









The Medicare Special Enrollment Period:  

If you are eligible for Medicare because you are 65 or older and are covered by your job-based insurance or your spouse's, you have a special enrollment period (SEP) to enroll in Medicare Part B while you are covered by job-based insurance and up to eight months after you no longer have that coverage. This means you are not required to take Part B during your initial enrollment period (IEP), the seven months surrounding your 65th birthday, when you become officially eligible. 

Using the Part B Special Enrollment Period means you will not have to pay a Part B late enrollment penalty (LEP). Normally, for every 12 months that people are Medicare-eligible and not covered by employer insurance delay enrollment, they accrue a 10 percent penalty, which is then added to their monthly Part B premium amount. In most cases, the penalty lasts for as long as someone has Medicare. 

Retiree Coverage, COBRA, ACA and Medicare

Many Medicare-eligible individuals do not know that employer-offered retiree coverage is almost always secondary to Medicare.

Similarly, health insurance coverage through COBRA (employer-sponsored coverage you can pay to keep after leaving your job, usually for up to 18 months) is also always secondary to Medicare coverage.

If you have employer-offered retiree coverage or COBRA, you should enroll in Medicare when first eligible to avoid possible penalties, higher medical expenses and gaps in coverage.

You should also make sure you understand how to make Medicare Part B enrollment decisions if you are enrolled in a Marketplace plan under the Affordable Care Act.

For more information about how Medicare coordinates with other types of health care coverage, contact EHB Insurance Group.

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