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9.23.2015

Medicare and employer coverage

It is that time of year again—open enrollment! However, you’ll be faced with new challenges if you or your spouse may be eligible for Medicare this year. It is necessary to understand your options in order to make a wise decision when choosing your healthcare.

Medicare Basics

  • Medicare is the most common form of coverage for people age 65 and older. When you turn 65, you become eligible to enroll. There are reasons that may qualify you for early enrollment, but in most cases, you’re required to wait until age 65.
  • The components of Medicare include:
    • Part A – This is coverage for inpatient hospital stays, skilled nursing facility care, and home healthcare. If you paid Medicare taxes while you were working for at least 10 years, you will most likely not have a monthly premium for this coverage.
    • Part B – This is your coverage for outpatient care. This includes doctor visits, ambulance services, durable medical equipment, preventive services, diagnostic tests, and outpatient procedures. You’re responsible for your monthly premium, which is based on your income.
    • Part D – This is your prescription drug coverage. Medicare sets standards for prescriptions plan coverages, and then these plans are administered by insurance companies. Your premium is based on the plan you choose. You can locate plans
    • Medicare Advantage plans – Also known as Part C, these plans cover your health costs for A and B, and in some cases D. Medicare Advantage plans are administered through private insurance companies. This means you still pay your traditional Medicare premium on top of your Medicare Advantage premium. Learn how to find plans
    • Medigap plans – These are supplemental plans purchased in addition to Parts A, B and D. They help to cover your out-of-pocket costs for eligible expenses that are your responsibility under traditional Medicare. You can locate plans here.
  • Traditional Parts A and B are administered by Medicare. Eligible expenses are typically covered at 80 percent, so 20 percent is your responsibility.

Considerations for Medicare and Employer Coverage

If you’re 65 and still working, have coverage through your spouse’s employer, or if your spouse is turning 65 and maintaining coverage through your employer, you or they may be eligible to waive parts of Medicare. Keep these tips in mind when considering coverage:

  • Be sure to enroll in Part A at the time of eligibility. Typically enrollment is automatic, but it’s beneficial to confirm this to prevent penalty.
  • Check with your employer or your spouse’s employer to ensure they’re still eligible for coverage. Most times employers will allow Medicare-aged individuals to participate, but some don’t.
  • If you’re able to continue to employer coverage, ensure that is it financially advantageous to do so. Compare the coverage under Medicare and the plans provided by the employer.
  • If you determine the employer plan is more beneficial, Part B can be waived without penalty. However, it is important that, when you no longer wish to participate in the employer plan, you enroll in Medicare immediately to avoid a penalty for late enrollment.
  • You may also be able to waive Part D without penalty. First, you will have to confirm that the prescription coverage offered through the employer is sufficient for Medicare coverage. You will need to find out from the employer if the coverage is “credible.” If it is, you’re able to waive Part D. If it isn’t, you must obtain a Part D plan to avoid a penalty. Each year you consider employer coverage, you will have to ask this question in order to prevent a penalty.
  • Once you’re enrolled in Medicare, you’re no longer able to contribute to a health savings account (HSA). You’re able to use funds that have been previously accrued.
  • If you’re on COBRA when you become Medicare-eligible, you must enroll in Part B immediately to avoid a late penalty. There is no Special Enrollment Period.

Keep in mind

If you or your spouse opts to maintain employer coverage and delay Medicare enrollment, be aware that once you or your spouse is no longer actively employed, you will have 8 months to enroll without penalty.

For Health Advocate Members

If you are a Health Advocate member, your Personal Health Advocate can help you understand Medicare and how it may work with employer coverage, research Medicare plans based on your health situation and prescription needs, and assist you in evaluating your options.