The intersection between Medicare & your group health plan

Coordination of benefits

When an employee turns 65, he becomes eligible for Medicare. In 2010, 39.6 million were enrolled in the government-run health care program because of age-eligibility at an average annual benefit of $11,762. Many employees' health insurance coverage may change when they become eligible, which is where a benefits administrator comes in. The sharing of costs can depend on how old the worker is, if they have a disability and the plan size. "We're expecting for this to become a growing issue," says Doug Goggin-Callahan, director of education at Medicare Rights Center. Because of the coupling of insurance coverage, employer-based insurance can sometimes become the secondary insurance, which is why it's so important for employees to know when to enroll it can decrease claims and avoid future litigation. The first chance to enroll in Medicare comes in the seven-month period surrounding his 65th birthday, or his 25th month of Social Security. Employees also can enroll early for coverage to start the month they become eligible.

Medicare and current employer insurance

How Medicare coordinates with a group health plan depends on the size of the plan, which can be classified as small or large. Under a small group plan (20 or less employees), Medicare becomes the primary health coverage for the employee. If the employee declines Part B coverage, outpatient and doctors benefits, she may have no health insurance and neither the group health plan or Medicare would be required to pay a bill. If an employee is eligible for Part B and becomes injured and the group health plan covers the expenses, the program can later stop payment or attempt to recoup payments, which can become a nightmare for employees. Medicare might later offer the option of retroactively buying back coverage. An employer can decide to stay primary, but the employee must get written confirmation from the employer and group health plan if she chooses to pay and doesnt have to.

Large group plans

If you have 20 or more employees, you're considered a large group plan, which changes the amount of coverage you must provide (for those eligible because of disability, it's 100 or more). In this case, the employee doesn't have to take Part B, but can take it as secondary coverage and becomes primary if the person stops working. Employees will come to you to find out how many employees are counted as part of the plan. If you're part of a multi-employer plan, the size of the largest employer will determine what you are considered. "Employers certainly deal with this when they're working beyond age 65, and they also deal with it when someone has declined to take Medicare Part B and it wasn't the right thing to do and they come back and ask how it can be corrected," Goggin-Callahan says.

Medicare & COBRA

COBRA, which lets some employees maintain their group coverage for up to 26 months after they leave a job or lose coverage, applies to large companies (20 workers or more) and is always secondary to Medicare. People with COBRA should take Part B within eight months after they stop working to avoid a penalty. If someone has COBRA first and then enrolls in Medicare, COBRA can end because it is so expensive.

What to do if your employee misses enrollment

Employees who don't enroll in Part B can face premium penalties, your insurance carrier may not pay for care and if the group health plan finds out that the employee was eligible for Medicare, they can seek to recoup the payments, which is why it's so important that employees enroll when they should and know the facts. Employees can enroll during the general enrollment period between Jan. 1 and March 31 of every year.