How Group Coverage and Medicare Coordinate:
Part 2 of a 3-Part Series
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For Medicare-eligible employees who choose to keep working and remain on your group health plan, the way that coverage coordinates with Medicare depends on your organization’s size—specifically, your number of full-time equivalent (FTE) employees. If you don’t know that number, you can use the FTE calculator tool at Healthcare.gov/shop-calculators-fte.
Groups with 1-19 Employees
If your organization is in this size category, Medicare is the primary coverage for Medicare-eligible employees who remain on your group plan.
Hospital coverage (Part A): Most Medicare-eligible employees staying on their employer plan will also want to enroll in Medicare Part A, as there is usually no premium. They qualify for premium-free Part A coverage if they or their spouse paid Medicare taxes for at least 10 years.
Medical coverage (Part B): Medicare pays the 80% share first, and many group plans will only pay on the 20% not paid by Medicare. In this situation, the employee must enroll in Medicare Part B to make sure the 80% is covered.
Drug coverage (Part D): If your plan does not have what is considered “creditable” drug coverage, the employee will need to enroll in a Part D drug plan to avoid penalty later. (Creditable means at least as good as a Medicare drug plan. To find out if your plan is creditable, check with your insurance carrier or broker.) Drug coverage on high-deductible plans are usually not creditable.
Groups with 20 or More Employees
For employers of this size, the group plan is the primary coverage, and Medicare is secondary. What this means for the various parts of Medicare:
Hospital coverage (Part A): This is the same as for smaller groups. Employees keeping group coverage will typically want to enroll in Medicare Part A, as there is usually no premium. Employees may save on hospital costs if they have this coverage.
Medical coverage (Part B): Medicare-eligible employees may opt to delay enrollment in Medicare Part B, since there is a premium. There’s no penalty for late enrollment in Medicare Part B, as long as you enroll within 8 months of retirement or losing group coverage, whichever occurs first.
Drug coverage (Part D): If you offer a creditable drug plan, Medicare-eligible employees may opt to delay enrollment in Medicare Part D, since, like Part B, this coverage is not premium-free. There’s no Part D late enrollment penalty if group Rx plan is creditable and employees enroll in Part D upon losing group coverage.
Resources
Employees are welcome to contact us directly. One of our Medicare experts can consult with them about their unique situation: (888) 863-3637 or TTY (800) 735-2900.
Information on PacificSource Medicare Advantage plans:
Pacificsourcemembersfirst.com/medicare-age-in
Basic information on Medicare:
Medicare.pacificsource.com/Find/UnderstandingMedicare
The official U.S. Government site for Medicare:
Medicare.gov
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You can read the rest of our series here:
Part 1 – For Active Employees Moving from a Group Plan to Medicare
Part 3 – For Medicare-eligible Employees Who Are Retiring
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PacificSource Community Health Plans is an HMO/PPO plan with a Medicare contract. Enrollment in PacificSource Medicare depends on contract renewal. For accommodation of persons with special needs at sales meetings call (888) 863-3637 or TTY (800) 735-2900.
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About this series
Every day, 10,000 Baby Boomers turn 65. That’s right—10,000 per day. That started in 2011 and will continue through 2030, according to the Pew Research Center. As they approach Medicare eligibility, these folks will need to navigate complex information and make important decisions about their healthcare coverage. To help you assist them, we’ve pulled together some basic info and resources into a three-part blog.
The first post in our series focuses on options for employees who would like to keep working, but move off group coverage and have Medicare only. Part 2 looks at considerations for active employees who opt to remain on your plan. And finally, part 3 addresses ways to assist employees who are planning to retire.
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