My Comments: Despite the appeal of retirement, no one is ready to admit that the transition from “working for money” to “money working for you” will be easy.
The cost of health care as you get older has the potential to cause your retirement plans to come unglued. To keep that from happening, Medicare is an enormous benefit, especially when coupled with what is known as a ‘medicare supplement’ insurance policy.
Many of us choose to keep working well beyond the age when we become eligible for Medicare and that alone presents some interesting challenges. Here’s a good summary of what you can expect if you are still employed.
by Joe Baker on 9/11/2018
If you’re 65 or older, working and have an employer group health plan based on your current work, you may have questions about how your job-based insurance coordinates with Medicare. On our Medicare Rights Center National Consumer Helpline, such questions are among the most frequent ones we get.
Here’s what you need to know:
For people who work and have job-based insurance, knowing when to enroll in Medicare falls on them. There is no formal notification from the Social Security Administration or Medicare. Some people are misinformed by employers or don’t have reliable information about Medicare enrollment, leading them to delay enrollment in Medicare Part B and then incur penalties and high medical costs.
The rules on coordinating Medicare and employer coverage
Having job-based insurance does allow you to delay Medicare enrollment without penalty and delay paying the Medicare Part B premium (the standard Medicare Part B premium is expected to be $134 a month in 2019). However, it’s important to know whether your job-based insurance will pay primary or secondary to Medicare.
In most cases, you should only delay enrollment in Medicare if your job-based insurance is the primary payer (meaning it pays first for your medical bills) and Medicare is secondary. There are additional enrollment considerations if you have a Health Savings Account (HSA); if you enroll in Medicare Part A and/or B, you can no longer contribute pretax dollars to your HSA.
Job-based insurance is primary if it is from an employer with 20 or more employees. Medicare is secondary in this case, and some people in this situation choose not to enroll in Medicare Part B so that they do not have to pay the monthly premium.
Job-based insurance is secondary if it is from an employer with fewer than 20 employees; Medicare is primary in this case. If you work at an employer this small and delay Medicare enrollment, your job-based insurance may provide little or no coverage. That’s why you should enroll in Medicare Part B to avoid incurring high costs for your care. The rules are different, however, if you are Medicare-eligible due to a disability or because you have End-Stage Renal Disease (ESRD).
The Medicare special enrollment period
If you are eligible for Medicare because you are 65 or older and are covered by your job-based insurance or your spouse’s, you have a Special Enrollment Period (SEP) to enroll in Medicare Part B while you are covered by job-based insurance and up to eight months after you no longer have that coverage. This means you aren’t required to take Part B during your Initial Enrollment Period (IEP), or the seven months surrounding your 65th birthday, when you become Medicare eligible.
Using the Part B Special Enrollment Period means you will not have to pay a Part B late enrollment penalty (LEP). Normally, for every 12 months that people who are Medicare-eligible and not covered by employer insurance delay enrollment, they accrue a 10% penalty, which is then added to their monthly Part B premium amount. In most cases, the penalty lasts for as long as someone has Medicare.
Retiree coverage, COBRA, Affordable Care Act and Medicare
Many Medicare-eligible individuals do not know that employer-offered retiree coverage is almost always secondary to Medicare.
Similarly, health insurance coverage through COBRA (employer-sponsored coverage you can pay to keep after you leave your job, usually for up to 18 months) is also always secondary to Medicare coverage. If you have employer-offered retiree coverage or COBRA, you should enroll in Medicare when first eligible to avoid possible penalties, higher medical costs and gaps in coverage.
You should also make sure you understand how to make Medicare Part B enrollment decisions if you are enrolled in a Marketplace plan under the Affordable Care Act.
If you have an insurance plan certified by the Marketplace, known as a Qualified Health Plan, deciding what to do as you approach Medicare eligibility depends on your circumstances. If you delayed enrolling in Medicare so you could stay in your Marketplace plan, you may be eligible to request time-limited equitable relief. That will let you enroll in Medicare Part B without penalty or eliminate or reduce your late-enrollment penalty under certain circumstances. The opportunity to request time-limited equitable relief lasts until September 30, 2018.
For more information on how Medicare works with other types of health care coverage, visit Medicare Interactive, the Medicare Rights Center’s free, online resource packed with hundreds of answers to Medicare questions.
Joe Baker is president of the Medicare Rights Center, a national nonprofit consumer organization that works to ensure access to affordable health care for older adults and people with disabilities. He is also an adjunct professor at the New York University School of Law. Previously, he was deputy secretary for health and human services for New York state.