Companies with employees nearing the age of 65 are likely to be asked a slew of questions regarding the crossover between Medicare and their employer-sponsored health insurance. Since most employees will be switching from employer-provided coverage, understanding their options and requirements can be confusing – for everything from Medicare Part A plans to spousal coverage (or lack thereof).
To better equip your Human Resource department with the information to support employees transitioning to Medicare, Medicare Choice Group has rounded up the 10 most frequently asked questions.
1. What happens to my employee’s health coverage if they plan to continue working past age 65?
Entry into Medicare may look a little different for your employee than those who retire, but that’s okay! The first thing to consider is the company’s size.
If your company has less than 20 employees, your workers are required to enroll in Medicare once eligible.
However, if your company has 20 or more employees, your workers may have the option to either enroll in Medicare or remain covered by the company’s group plan.
Keep in mind the importance of evaluating all options, as Medicare may save them money.
This might be the case, for example, if your company offers a high deductible health plan with a health savings account (HSA). Enrolling in Medicare Part A requires both the company and employee to stop all HSA contributions six month prior to enrolling. Employees looking to continue contributions may prefer to delay enrollment until ready.
2. How do my employees sign up for Medicare Part A & Part B?
Medicare Part A and Part B, also called “Original Medicare,” become available to eligible individuals when they turn 65 – regardless of employment status.
Medicare Part A enrollment and Medicare Part B enrollment will happen automatically for some people. However, some will need to enroll manually. (Unsure which category your employer falls in? Don’t worry, we can help).
For those enrolling in Medicare manually, your employees and retirees can sign up online, over the phone, or visit their local Social Security office. For help navigating the application process, preparing the necessary paperwork, or researching plan options, Medicare Choice Group experts are here to assist.
3. If an employee continues working past age 65, can they enroll in Medicare Part A only?
Yes. But, there are stipulations.
If your employee is at least 65 years old and has been employed for at least 10 years under Medicare-covered employment while paying Medicare taxes, they will automatically be enrolled for premium-free Medicare Part A – only if they are currently receiving Social Security benefits.
If they are not receiving Social Security benefits, they must enroll for Part A manually.
Note: If an employee does not meet the work history requirement, they can enroll in Medicare Part A – but will have to pay a premium. This is another reason they should weigh the options between what Medicare Part A covers and your company’s group coverage for the best cost and coverage.
4. Is Medicare coverage as good, or better, as employer group coverage?
Honestly, it depends.
Employer group coverage often offers only a select number of plans, all of which are “one-size-fits-all.” This limits their individual choice in benefits. However, employer coverage offers spousal and family coverage, which may be important to your employee.
Medicare, on the other hand, offers hundreds of customizable plans that range in coverage, benefits, and costs. However, Medicare Parts A and B may not cover everything your employee is used to receiving, such as prescription drug coverage. To receive this under Medicare, they will need to enroll in Medicare Advantage or Supplemental plan.
Ultimately, the best option for your employees and retirees will be the one that aligns with their individual situation.
5. What is a Medicare Advantage plan and a Supplement plan?
Medicare Advantage plans (Medicare Part C) and Supplement plans provide alternative or additional coverage for Original Medicare. Depending on your employee’s health care needs, they may be interested in customizing coverage through a combination of Parts A, B, C, and D.
Medicare Advantage (MA) and Medicare Advantage Prescription Drug (MAPD) plans require costs like deductibles and copayments. Usually, MA plans have low or no premiums. MA or MAPD plans are appealing because they can offer additional benefits, such as vision, hearing, dental, and prescription drug coverage.
Supplement plans, also referred to as Medigap plans, cover only the services included in Original Medicare – filling in the “gaps” to cover more costs for Medicare Part A and Part B. Supplements often come with wider or unlimited provider networks. But, unlike MA plans, Supplements typically have higher premiums and do not include vision, hearing, dental, or prescription drug coverage.
6. What happens to my employee’s HSA when they enroll in Medicare?
HSAs are impacted by Medicare enrollment. Both you and your employee are obligated to stop all HSA contributions six months before their Medicare coverage begins.
The good news is after they enroll, they can still continue using existing HSA funds to pay for medical and health related expenses.
7. What should my employee do if they are eligible for Medicare, but their spouse is younger?
It’s likely your Medicare-eligible employees are supporting dependents such as spouses through their employee-sponsored coverage. If the spouse is younger than 65 and unable to enroll in Medicare, they will need to find individual health coverage through another source once your employee enrolls in Medicare.
If the spouse is currently unemployed or ineligible for their own employer coverage, there are additional options available, including:
- Purchasing an individual health insurance plan through the Health Insurance Marketplace.
- Applying for Medicaid, a public health insurance program based primarily on income and family size. Criteria for eligibility vary from state to state.
- Applying for temporary Consolidated Omnibus Budget Reconciliation Act (COBRA) insurance.
8. Retiree health insurance vs. Medicare: what’s the difference?
Does your company offer retiree health insurance? Retiree health insurance plans typically serve as secondary payers to Medicare, meaning the retiree policy will cover a portion – if not all – of remaining coverage costs after Medicare pays its shares.
Enrolling in Medicare, on top of a provided retiree health insurance program, will help ensure your employees stay fully covered after leaving the workforce.
9. If my employee retires before turning 65, what options are available for individual health insurance?
Several individual health insurance plans are available according to state. Depending on the plan chosen, costs will vary.
10. Does my employee also need Medicare if they are eligible for veteran’s benefits?
If your employee is a veteran who qualifies for health care benefits, they are not required to enroll in Medicare. However, since they are eligible, they have the opportunity to receive benefits through both programs.
Note: A Medicare Advantage plan might offer a wider network of providers on top of other benefits, which your employee may want to explore.
Veterans who sign up for Medicare Advantage will continue to have access to their Tricare health insurance and Veterans Affairs (VA) coverage while receiving prescriptions through the same coverage as before. Did you know, Medicare Advantage Prescription Drug plans are designed specifically to meet the coverage needs of veterans?
Learn More About Your Employee’s Transition to Medicare
Interested in learning how to become a valuable resource in your employee’s transition to Medicare? Medicare Choice Group can provide additional information and one-on-one support to ensure your employees are supported every step of the way.
Connect with us at (855)-482-0574 or send us a note. We’d love to hear from you!