With much of today’s workforce continuing to work past the age of 65, companies have become more involved in the transition to Medicare than ever before. Since companies shoulder a significant amount of money for employee group coverage, they also have a vested interest in being a Medicare resource and helping employees make the switch as seamless as possible.
Enrolling in Medicare can be overwhelming for many people, especially when they are still working full or even part-time. If any of your employees or retirees are nearing their 65th birthday, this is a good time to not only make sure they are prepared to enroll in Medicare – from understanding open enrollment deadlines to managing spousal coverage – but that you can accurately answer any of their Medicare questions.
Here are 5 ways you can help your employees navigate the transition to Medicare.
1. Initial Enrollment Period Reminders
The first chance for most people to enroll in Medicare is three months before they turn 65. This begins what is called the Initial Enrollment Period (IEP). The IEP is a seven-month window that ends three months after the month of their 65th birthday.
For example: if your employee’s birthday is May 15, their IEP would begin February 1 and end August 31.
Since companies keep records of employee birth dates, this is an easy opportunity to begin offering Medicare information in advance of their IEP.
2. Tips for Avoiding Late Enrollment Penalties
The risk of an employee missing their IEP comes with financial consequences that can last their entire life. Here’s a few:
Part A Penalty
Though Medicare Part A is available to most people for free, some might have to buy it.
If your employee is required to buy Part A but does not enroll during their initial enrollment period, their monthly premium will go up by 10%. This 10% penalty will be in place for twice the number of years they were eligible for Part A but not enrolled.
Part B Penalty
Missing the enrollment for Medicare Part B also results in an increase to their premium by 10%, but this time calculated for every 12 months they were not covered but eligible. This means the longer they go without Part B, the more they pay.
Unfortunately, this premium increase is applied every month for the rest of their life.
Part D Penalty
Like Medicare Part B, there is also a penalty fee for not enrolling in Medicare Part D (Prescription Drug coverage) and calculated on the length in which the employee was eligible but neither enrolled nor covered by creditable coverage.
Creditable coverage simply refers to prescription drug coverage provided typically through an employer or third-party that either matches or exceeds the quality of Medicare’s drug coverage.
This penalty is calculated as 1% of the year’s national base beneficiary premium. Since 2022’s base beneficiary premium is $33.37, your employee will be charged 1% of $33.37 for every month they went without creditable coverage. Similarly to Part B, they will pay this fee every month for as long as they’re enrolled in Medicare.
3. Offer Resources for ‘Deferred’ Medicare
Some employees may choose to delay Medicare when they turn 65, let’s say if they prefer their current coverage plan. However, they will still need to take steps to delay Medicare enrollment without being subject to late fees.
Recommend speaking with a Medicare resource expert to confirm they qualify for deferred enrollment, as eligibility can vary.
Note: If your employee chooses to delay Medicare, they must still have creditable prescription drug coverage. Medicare Choice Group offers employers resources to help ensure employers receive the coverage they need – based on their individual situation and health needs – and avoid any unnecessary penalties.
4. Clear Up Medicare Questions About Social Security
The current full retirement age is 66 and 10 months. For individuals born during or after 1960, the full retirement age is 67.
While some employees will enroll in Medicare when they turn 65, they are not required to begin Social Security payments. This is important because even though they could start receiving Social Security benefits when they turn 62, they will permanently lose a percentage of their benefits for every six months they enroll prior to full retirement age.
Depending on your employee’s financial situation, they even might be interested in waiting to enroll in Social Security. For each month they go between full retirement age and age 70 without collecting, Social Security benefits will increase by two-thirds of a percentage. – for a total of eight percentage points per year. But these credits stop accruing at age 70, so there is no benefit to holding off any longer.
5. Don’t Forget About Spousal Coverage
Switching to Medicare can be particularly complicated for couples where one spouse’s employer group coverage insures both individuals. Unlike employer coverage, Medicare plans do not cover dependents and employees should not assume the spouse will remain covered through Medicare.
Medicare offers a variety of plans to match each person’s health needs, which means your employee and their spouse may not necessarily want to enroll in the same plan. Taking into consideration prescriptions, preferred doctors and pharmacies, or pre-existing health conditions will help your employee make sure they and their spouse get the coverage that’s right for them.
Team Up With Medicare Experts
Your employees are likely to have questions about their personal journey into Medicare. Whether they’re seeking information on spousal coverage, eligibility for deferred enrollment, or somewhere in between, the easiest way to verify available options is to let our Medicare Choice Group experts do the heavy lifting.
Become an informed Medicare resource for your employees. Connect with us online or call us at (855)-482-0574.
