How Medicare and employer insurance work together

MedicareQuestions_A_Main_768x512.png

Retirement is bound to be a part of every employee’s work cycle. You may even be able to identify a few employees within your workplace who are soon to retire.

Here’s the deal: If your employees would rather get a colonoscopy or shop for cable and internet plans than discuss Medicare or retirement, there’s a problem.

Can you blame them, though?

More than 70 percent of future (and current) retirees wish they had a better understanding of Medicare. It’s difficult when your employees are unsure of the right questions to ask, where to start, what the future could look like, or even which health insurance carrier to go with. And, to top it all off, your employees have to keep in mind Medicare has penalties if they don’t sign up in time.

As your company’s HR or benefits administrator, you have a lot on your plate already and knowing the ins and outs of Medicare may not be at the top of your to-do list. But, that doesn’t mean it can’t be. Achieve health plan hero status — and still have time in your day for other tasks — when you review this comprehensive list of questions your employees (and maybe even you!) didn’t know to ask about Medicare.

Medicare not your area of expertise? We can help.

One thing to remember about Medicare is that there is no notification or warning from Medicare or Social Security Administration that prompts individuals to enroll — it's completely on the individual. But having an employer-sponsored health insurance plan allows employees to delay Medicare Part B without a late enrollment penalty even if they choose to keep working past age 65.

Please note: COBRA and retiree coverage do not qualify an employee to waive Part B.

How does Medicare work with an employer-sponsored health insurance plan?

In some cases, Medicare is the primary payer, meaning they pay first before other insurance. In those instances, other insurance — like employer-sponsored insurance — is the secondary payer. Here are the general guidelines for who pays first:

• If your organization has 20 or more employees, then the employer plan pays first, and Medicare pays second.
• If your organization has less than 20 employees and isn't part of a multi-employer or multiple employer group health plan, then Medicare pays first, and the employer plan pays second.
• If the employer has less than 20 employees, the employer plan pays first, and Medicare pays second if both of these conditions apply:
  • The employer is part of a multi-employer or multiple employer group health plan.
  • At least one of the other employers has 20 or more employees.

Get more details on Medicare.gov

If my employee is on their spouse's insurance plan, does Medicare pay first or second?

Medicare is the primary payer if both of these situations apply:

• A spouse is entitled to Medicare on the basis of age.
• A spouse has group health plan coverage based on the current employment status of his/her partner.

Medicare is the secondary payer when:

• The employee's spouse is entitled to Medicare on the basis of disability and is covered by a large group health plan.
• For the 30-month coordination period when the employee's spouse is eligible for Medicare on the basis of end-stage renal disease (ESRD) and is covered by a group health plan on any basis.
• When the employee's spouse is entitled to Medicare on the basis of age and has group health plan coverage on the basis of his/her own current employment status.

Should my employee keep our employer-sponsored health insurance or switch to Medicare?

In most cases, your employee should only delay their enrollment in Medicare Part B if the employer health plan is the primary payer. Additionally, if your employees have a health savings account, they will no longer be able to contribute to it when they enroll in Medicare.

What can my employees do with their health savings account (HSA) when they switch to Medicare?

When an employee enrolls in Medicare Part A, they are no longer eligible to contribute pre-tax dollars to an HSA. The month an employee’s Medicare plan begins, they should switch their HSA to $0 per month. However, your employees can continue to withdraw money from an HSA after they enroll in Medicare to help pay for medical expenses (e.g., deductibles, copays and coinsurance).

What are the different penalties for Medicare?

• Medicare Part A penalty: Typically, Part A is completely free to those who are eligible. But, if an employee isn’t eligible for premium-free Part A, and doesn’t sign up for it when they are first eligible, their monthly premium may increase.
• Medicare Part B penalty: If an employee doesn’t sign up for Part B when they are first eligible, they will pay a late enrollment fee and will continue to pay this fee for as long as they continue with Part B. Note: If an employee remains on the active employer plan, then they will not incur Part B penalties by delaying enrollment.
• Medicare Part D penalty: If an employee has a prescription plan that provides creditable coverage through their employer, they can choose to delay enrolling in Part D. However, there is a lifetime late enrollment penalty if they don't sign up once the employer plan ends or if it becomes non-creditable.

Learn more about Medicare options for those who are working past 65.

It’s true, Wellmark Blue Cross and Blue Shield members get more.

With Wellmark, your employees will get more than a Medicare plan, they’ll get peace of mind knowing their coverage is coming from a company they know and trust. Your employees can also count on a variety of extra programs and services such as:

• Exclusive discounts through Blue365^®. Your employees receive Blue365 discounts on gym memberships, heart rate monitors and more.
• Blue^SM. Find member stories, recipes, health tips and more. The magazine comes in the mail, but exclusive content can be found online at any time.

Questions? Contact your authorized Wellmark account representative, or email us at MedicareBusinessTeam@Wellmark.com.