While visiting with the excellent Zenefits support team the other day, I asked what questions do you hear repeatedly from clients? I was overwhelmed that the response was a large number of employees turning 65 don’t know how Medicare coordinates with their company sponsored group health insurance plan. And after checking with several small business HR clients, it was evident that a lot of confusion exists on this subject. So, I thought the topic would be a great one to dive into for this week’s column.
First, let’s outline when Medicare actually plays a role alongside a company’s health insurance plan.
- If a group health insurance plan has more than 20 employees, the company sponsored group health plan is the primary payer and any benefits for Medicare-eligible employees are paid after the company health plan has paid.
- In the reverse, if the group health insurance plan has fewer than 20 employees, then Medicare is the primary payer and the group health plan becomes secondary.
- In both instances, when the primary carrier does not pay claims in full, then the balances should be filed with the secondary payer. After both Medicare and the group health plan have paid their contracted adjudicated amounts, the employee then pays the unpaid balance.
Next, as a company health insurance plan sponsor, what advice should you be giving people in your company turning 65?
When a person is approaching 65, they have a number of options to consider. Below is a break down of each: Medicare Part A, B, C, and D.
- Part A of Medicare covers hospital care, skilled nursing facility care, nursing home care, hospice, and home health services. It is provided to qualified recipients at no cost.
- Part B covers doctor visits, surgeries, and lab tests. The services must fall into one of two categories, medically necessary and preventative. Qualified recipients must pay for Part B based upon a sliding scale that is tied to your income as reported on your income tax.
- Part D is a prescription drug benefit plan governed by the Federal government to subsidize the cost of prescription drugs for Medicare recipients. Like Part B recipients must pay for this benefit plan.
- Part C are Medicare Plans offered by private insurance carriers that cover Parts A & B and sometimes Part D for a monthly premium. Plans are sometimes referred to as Medicare Advantage or MA plans.
Depending on the benefits level of your group health insurance plan, you may want to only sign up and register for Medicare Part A if your company plan is rich in benefits and your employer pays a big chunk of the premium. Having your dependents covered on the company plan may also dictate your choices. Under no circumstances should you delay signing up for Part A since there is no cost involved.
If your company plan is not so hot from a benefit standpoint, then you may want to also consider signing up for Part B to help pay for those expenses you may incur that are excluded or count towards your deductibles. This will increase your monthly outlay for health insurance, so plan carefully. By having both your company health plan and Medicare A+B, you stand a better chance at getting your expenses reimbursed.
Based on your company health drug benefits and your personal needs for drug maintenance, you might consider purchasing Part D.
I hope the above information is helpful to those of you approaching age 65. I’ve been there, and it’s confusing. Don’t be afraid to seek help from Medicare.gov for additional clarification.