It is possible to carry some Medicare and employer coverage if you decide to work past the age of 65. But the rules aren’t the same for everybody.
Many factors are involved in whether or not you decide to go one way or the other. And what’s good for you might not be the right decision for somebody else. Let us arm you with the right information to help you determine which decision is right for you.
The Difference Between Primary and Secondary Payers
Regarding health coverage, a payer is a person or entity responsible for paying the costs of your medical care. The size of the company you work for — the company that is providing your employer coverage — will determine whether Medicare or your employer coverage is the first or second payer when sorting out your medical costs.
For a larger business with over 20 employees, employer coverage will be your first payer, and Medicare will be your second. For smaller businesses with 20 employees or less, Medicare will usually be your first payer, and your employer coverage will step up to fill in the gaps.
Under most circumstances, the best plan for newly retired beneficiaries is to enroll in Medicare Part A right away during their Initial Enrollment Period (IEP) and wait to enroll in Medicare Parts A, B, and D until they’re ready to retire fully. But this can confuse filing claims and figuring out who is supposed to pay for what.
Things will usually sort out between Medicare and your employer coverage, but it could take months. And on rare occasions, you may have to pay out-of-pocket for your care if the healthcare you require exhausts your Medicare and employer coverage benefits.
Are Part B and Part D Optional?
It’s optional to forego enrolling in Medicare Parts B and D if you decide to keep working past retirement. But most recipients will be required to enroll in Part A as soon as they are eligible during their IEP.
Waiting to enroll in Medicare Part A past your IEP will incur a late enrollment penalty. Similarly, you could face a late enrollment penalty for Medicare Part B, Medicare Part D, or both if you don’t stay on top of your deadlines and your paperwork. Enrolling in Medicare Parts B and D is often redundant for beneficiaries who want to keep their employer coverage.
In general, carrying redundant coverage isn’t a good idea because you’re paying extra for benefits already covered by one form of insurance or another. Also, providing redundant coverage to Medicare recipients is illegal and considered fraud in certain circumstances.
Avoiding Late Enrollment Penalties With Medicare & Employer Coverage
When you decide to retire and end your employer coverage — also known as “creditable coverage” — you will need to act fast to avoid late enrollment penalties. Sometimes the enrollment window can be as short as 2 months or as long as eight months, depending on your circumstances.
Also, remember that it isn’t the length of your enrollment window that determines how expensive your late enrollment penalty will be. It’s the time between the end of your IEP and when you finally decide to enroll. Some recipients may decide to work for several years past age 65, which can amount to some expensive penalties.
When you send in your application to enroll in Medicare Part B after your IEP has expired, you will need two important documents to make sure you do not get a late enrollment penalty:
- A letter of creditable coverage from your former employer
- Form CMS-L564 (which must be filled out by your employer)
Make sure you submit all of your required documents promptly. This will avoid penalties and get the best deal for your health care coverage.
Employer Contributions and HSAs
Although many employer health plans have the monthly premium automatically deducted from your paycheck, it is illegal for your employer to pay your Medicare premium(s) for you. But there are some exceptions, starting with a 105 Reimbursement Plan. This plan lets employers repay their employees for the exact cost of their Medicare premiums. And best of all, those repayments are tax-exempt.
Your employer will use a Health Reimbursement Arrangement (HRA) to compensate you. It’s sort of like a contract stipulating how you will be reimbursed for your Medicare premiums. There are two different types:
Individual Coverage Health Reimbursement Arrangement (ICHRA)
These are the most flexible Arrangements. You get all of your various premiums taken care of.
You may even be able to negotiate reimbursement for other types of medical costs. These are typically offered by businesses that have 50 or more employees.
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
There are for businesses with fewer than 50 employees, especially those that don’t offer a group health plan, there are QSEHRAs. But you must at least enroll in Medicare Part A to qualify for reimbursement. This is the minimum essential coverage (MEC) necessary to qualify.
The good thing about QSEHRAs is they cover all of your premiums — with one exception. Retirees who worked fewer than 40 quarters during their lifetime will be responsible for paying Part A premiums.
Can I have both Medicare Part B and employer coverage?
You can have both at the same time. But it is beneficial for you to learn how they work together. This is so you won’t have to pay out of pocket.
Do I need Medicare Part B if I have employer health coverage?
No, you don’t need to enroll in Part B if you have health coverage through your employer. But the longer you wait to enroll
Does your employer provide Medicare?
No, Medicare is provided by the federal government.
Medicare Supplement Plans Can Complete Your Coverage
If you have both Original Medicare and an employer-provided plan, there can still be gaps in your health coverage. A Medicare Supplement or Medicare Advantage plan may be your best bet to fill those gaps. We’re here to help!
Our licensed insurance agents have all the knowledge regarding Medicare and can go over the best plans for your needs. Their time for this to you is free of charge.
So when you’re ready to learn more about Supplemental Medicare plans, call us today. Or fill out our online rate form to connect with the best plans.