More and more people are starting to work past the traditional retirement age of 65 and continue to get healthcare benefits through their employer. When this happens, and they also have Medicare benefits, questions arise. Understanding how Medicare works with your employer’s health insurance benefits or your spouse’s job can help you decide if you want to sign up for Medicare when you become eligible or wait.
The first thing you want to think about is whether Medicare will be the primary or secondary payer to your current insurance through your employer. If Medicare is primary, it means that Medicare will pay any health expenses first. Your health insurance through your employer will pay second and cover either some or all of the costs left over. If Medicare pays secondary to your insurance through your employer, your employer’s insurance pays first. Medicare covers any remaining costs.
Depending on your employer’s size, Medicare will work with your employer’s health insurance coverage in different ways. If your company has 20 employees or less and you’re over 65, Medicare will pay primary. Since your employer has less than 20 employees, Medicare calls this employer health insurance coverage a small group health plan. If your employer’s insurance covers more than 20 employees, Medicare will pay secondary and call your work-related coverage a Group Health Plan (GHP).
Delaying Medicare Coverage
If you have good insurance as a result of your, or your partner’s, employment when you become eligible to enroll in Medicare benefits, you may consider delaying your enrollment. Medicare will allow you to delay your enrollment without paying the penalty if you have current insurance through your, or your partner’s, work. It doesn’t matter the company size either.
However, if you work at a company with fewer than 20 employees, you may want to sign up for Medicare because it’ll be your primary payer. You will have a Special Enrollment Period if you have health insurance through your employer to enroll in Medicare. This special period lasts for eight months after the first month you go without your employer’s health insurance. Many people avoid having a coverage gap by signing up for Medicare the month before your employer’s health insurance coverage ends.
You should also know that you may run into a few problems if Medicare is supposed to be your primary coverage, and you delay enrolling in it. The first problem is that your employer can legally refuse to make any health-related medical payments until Medicare pays first.
If you delay coverage and your employer’s health insurance pays primary when it was supposed to be secondary and pick up any leftover costs, it could recoup payments. If they do this, they could leave you on the hook for any out-of-pocket costs.
Medicare and COBRA
After your employment ends, COBRA will allow you to keep your employer Group Health Insurance Plan for a limited time. This program’s continuation of coverage is meant to help protect you from ending up with no health insurance right after you lose a job or retire.
If you’ve already enrolled in Medicare, Medicare will be your primary with COBRA as your secondary. The only exception to this rule is if you have End-Stage Renal Disease and COBRA will pay primary.
Your COBRA coverage typically ends once you enroll in Medicare. However, you could potentially get an extension of the COBRA if Medicare doesn’t cover everything the COBRA plan does like dental or vision insurance. If this is the case, it makes sense to keep your COBRA.
If you already have a Medicare plan and you become eligible, you can also enroll in COBRA. However, you do want to see whether or not the additional fees and expenses associated with COBRA make sense financially. Whichever you choose, you want to make sure you have adequate coverage that covers all of your healthcare needs.