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by Cathy Duesterhoeft, Waushara County Elder Benefit Specialist
If you or your spouse are currently working and you have group health plan coverage through that employer, whether you should enroll in Medicare depends on several factors. One key question to consider is what is the reason for Medicare eligibility? Is it due to turning age 65, a disability determination, or is it solely due to an End-Stage Renal Disease (ESRD) diagnosis?
•Medicare eligibility for turning 65. In this case, it is important to ask how many employees work for the employer. Employers with 20 or more employees must offer current employees 65 and older the same health benefits, under the same conditions, that they offer younger employees. Similarly, if coverage is offered to spouses, spouses 65 and older must be offered the same coverage that is offered to spouses under 65. If the employer has 20 or more employees, the group health plan generally pays for health care expenses before Medicare pays. However, if the employer has fewer than 20 employees, Medicare generally pays first, so the employer coverage may not pay much, if anything, toward medical expenses. You should check the plan documents to confirm which type of coverage pays first.
•Medicare eligibility due to disability. In the case of Medicare eligibility due to a disability determination, it is also important to ask how many employees work for the employer. If the employer has 100 or more employees, the group health plan generally pays for health care expenses before Medicare pays. However, if the employer has fewer than 100 employees, Medicare generally pays first, so the employer coverage may not pay much, if anything, toward medical expenses. You should check the plan documents to confirm which type of coverage pays first.
•Medicare eligibility due to ESRD. When someone is eligible for Medicare solely due to ESRD, the employer group health plan will pay first, regardless of how many employees work for the employer. This is true for the first 30 months of Medicare eligibility (whether you enrolled in Medicare or not). After the first 30 months, Medicare will pay first, as long as you are still eligible for Medicare based on ESRD.
Eligibility to Enroll
in Medicare Part A
For age-related Medicare, the first time you can enroll in Medicare is during your initial enrollment period, which begins 3 months before the month you turn 65 and ends 3 months after the month you turn 65. Most people do not have to pay a premium for Part A and should enroll in Part A when they turn 65, even if they have group health coverage from an employer. However, if you will have to pay a premium for Part A or if you contribute to a Health Savings Account (HSA), you may want to consider signing up for Part A later. Because of IRS rules, once you enroll in Part A, you won’t be able to contribute to your HSA.
If you become eligible for Medicare because of a disability, enrollment in Medicare Part A will be automatic after you have been receiving Social Security Disability Insurance (SSDI) or railroad disability annuity checks for 24 months. Part A enrollment will begin at the start of the 25th month.
If you become eligible for Medicare due to ESRD, eligibility for Medicare Part A will begin after a doctor prescribes a regular course of dialysis, because your disease has reached the point that you need a kidney transplant or regular dialysis in order to survive. Once you are eligible for Medicare, you must apply for enrollment. Enrollment is not automatic. Once your application is accepted, Medicare coverage may begin. Medicare coverage usually starts the first day of the third month following the month in which regular dialysis begins. Some or all of the three-month waiting period may be waived if you participate in a self-dialysis training program or if you have a kidney transplant during that time.
Eligibility to Enroll
in Medicare Part B
There is usually a premium to take Medicare Part B, which makes some people question when and whether to take it at all if they are already covered by an employer-sponsored group health insurance plan.
In the case of age-related Medicare eligibility, you can wait to sign up for Part B until you or your spouse stop working or otherwise lose the employer coverage.
In the case of Medicare eligibility due to a disability, enrollment in Medicare Part B will be automatic after you have been receiving SSDI or railroad disability annuity checks for 24 months. Unlike Part A, however, Part B enrollment can be declined.
If you are eligible for Medicare due to ESRD, as with Part A, you must apply for coverage under Part B. It is not automatic. You will not pay a late enrollment penalty for Part B as long as you enroll during the 8-month special enrollment period (SEP) that will start the month after you or your spouse stop working or the month after the employer coverage ends, whichever comes first.
In addition, you will be able to postpone your one-time Medigap open enrollment period, which occurs during the first six (6) months you are enrolled in Part B. During your Medigap open enrollment period, you will be able to buy any Medigap policy that an insurance company sells for the same price as people with good health, even if you have health problems. However, once this open enrollment period ends, you may not qualify again without having to pass medical underwriting. This means that you may have to pay more for a Medigap policy, or you may not be able to buy one at all.
Prescription Drug Coverage
If you decide to enroll in Medicare Parts A and B, you’ll have to determine what type of prescription drug coverage is best for you. If you remain on an employer health plan, you should check with the plan administrator to see if the plan counts as “creditable drug coverage.” You will not pay a penalty if you decide to enroll in a Part D plan later, as long as you continue to have creditable prescription drug coverage.
However, if you think you want to sign up for a Part D plan in addition to the employer coverage, you should be sure to ask the employer if you can have both types of coverage. Many employer health plans do not coordinate with Part D plans. This means that if you join a Part D plan, you, your spouse, and anyone else in your family who is covered under the employer health plan may lose that coverage. Once someone loses employer health coverage, it can be difficult to get that coverage back until the next open enrollment period.
What Happens if the Employer Gives “Bad” Advice?
Deciding whether to enroll in Medicare while covered under an employer-sponsored group health plan can be confusing. Often, therefore, beneficiaries will ask HR at the employer for advice about what to do. Sometimes, however, HR gives incorrect advice, and this can be particularly damaging when it involves bad advice related to taking Medicare Part B. I
ncorrect advice to not take Part B when an individual is first eligible can result in penalties and/or the beneficiary having to cover the cost of all their own medical care in situations where the employer is too small or Medicare is otherwise required to pay primary.
Prior to 2023, relief was only available in situations where a government official, such as someone working for the Social Security Administration (SSA), had provided bad advice about whether to enroll in Medicare Part B.
In such cases, a person could request equitable relief from SSA to have their enrollment in Part B backdated to when they were first eligible to enroll.
Due to the realization that incorrect advice is often handed out by employers, too, a new SEP was put in place to provide relief to employees and their spouses who may have received bad advice from HR. POMS HI 00805.384 provides a 6-month SEP to enroll in Medicare Part A or Part B from the day you notify SSA that your health plan or employer misrepresented or gave you incorrect information that resulted in you missing the chance to sign up for Medicare. Coverage can start the first of the month following the date of enrollment. However, it is important to note that this SEP only applies to bad advice given after January 1, 2023!
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