Medicare as your employer plan?

by Miriam Zettlemoyer

Are your employer health insurance costs getting out of control?  Medicare may be an answer you’re not thinking about.

Medicare is a federal health insurance program that is offered to American citizens turning 65 and other eligible individuals.  The two parts of original Medicare are parts A & B.  You can choose to add on a Supplement (options A – N; sometimes called Medigap) with a drug plan (Part D) or a Medicare Advantage (Part C) plan to cover additional costs not covered by original Medicare.

Medicare does work with employer coverages, and you should enroll in Part A when you turn 65 as it’s free for most people.  Part A helps cover the hospital portion of the benefit, and Part B is the medical portion.  Part B does have a cost and is determined by your income.  The option to waive Part B is available if you have employer coverage on your own or through a spouse.  If you don’t have other health coverage deciding to waive Part B will cause a penalty if you don’t sign up when you’re first eligible.  Part A is primary if you work for an employer with less than 20 employees participating in the health plan and you must enroll when you turn 65 to avoid a penalty and delays in acquiring Part A.  If your employer has more than 20 employees on their health plan than you could also decide to waive Part A.

Some employers may make you take full Medicare benefits when you turn 65.  Why do they do this?  The Affordable Care Act that was established in 2010 and took effect in 2014 with many changes happening before that.  It created a different group and individual health plan coverages costing the employer and employee more money to cover older employees.  Moving employees age 65 and older to Medicare helps to control the out of pocket costs the employers and employees pay including deductible costs and costs when visiting the doctors, hospitals, surgeries, treatment, etc.  Many times, the Medicare benefits offer better coverage with low or no deductibles and low or no out of pocket costs making this a great alternative to traditional employer plans.

A review of current employer plans versus Medicare Benefits is established before deciding to move off of your work benefits.  We look at health, how often you go to the doctors, and what medications do you take regularly.  Second, we take a look at your budget and determine what the costs would be for each choice.  Finally, we look at your health network preferences like doctors, hospitals and pharmacies.  How important is it to have coverage when you travel?  Medicare supplements and advantage plans do have domestic travel coverage options that vary based on plan choice.  Medicare plans can also offer ancillary benefits and can include things like dental, vision and even gym memberships to an approved facility.

Employers can typically save money on employee benefits by moving their 65 and older employees off the group coverages.  The costs associated with older employees tend to be more per month than for younger employees.  The savings can be hundreds to thousands of dollars per month if the employee workforce is older.  Employers can reimburse employees for their Part B, Part D, and Medicare Supplement policies but IRS rules apply.  The Medicare benefit plan arrangements must be integrated with other group benefit plans.

*Medicare reimbursement arrangements will be considered to be “integrated” with another group health plan if:

  • The employer offers a group health plan other than the employer payment plan that does not consist solely of excepted benefits and offers minimum value coverage;
  • The employee participating in the employer payment plan is actually enrolled in Medicare Parts A and B;
  • The employer payment plan is available only to employees who are enrolled in Medicare Part A and B, or Part D; and

The employer payment plan is limited to reimbursement of Medicare Part B or D premiums and excepted benefits, including Medigap premiums.*

When age 65 is looming, it’s best to meet with a Medicare Planning Specialist who can take the anxiety off employers as well as employees and help decide and determine the best course of action for their health insurance coverages.  Good health coverage and saving money can be accomplished.

*Excerpt taken from IRS Notice 2015-17—Employer Payment Plans and the ACA’s Market Reforms 03.30.15*

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