By Terri Potter:
What are your options if you or your spouse is planning to continue to work and you have an employer Group Health Insurance Plan?
These are difficult questions because the Medicare Rules are extremely complex and confusing. Often experienced HR managers that are supposed to advise employees on insurance matters do not know the correct and full answers to give to the employees regarding Medicare.
Whether a person can delay signing up for Medicare depends on several things:
1. Medicare Secondary Payer Rule.
You can delay signing up for Medicare if Medicare is deemed as the Secondary Payer and the Group Health Plan (GHP) you are on is recognized as the Primary Payor to Medicare. This means that your company insurance will continue to pay as normal whether you sign up for Medicare or not. Typically, this is the case with employer’s GHPs if the employer has 20+ full time employees. But you Must make sure this is the case.
However, if your GHP it is not the Primary Payor, but a Secondary Payor to Medicare, you Must sign up for Medicare Parts A and B when you first become eligible for Medicare.
If you delay signing up for Medicare in this case, you may face serious negative consequences such as:
- An Enrollment Penalty for Medicare Part B when you finally do sign up. The penalty is a 10% increase for every 12 months that you delay your enrollment. Worse yet is the increased premium stays with you for your lifetime on Medicare.
- Unpaid Medical Bills (this is often how people first realize there is a problem with Medicare). Their employer group insurance plan that in the past might have paid 80% of your bills, will now only pay the 20% that Medicare does not pay. That is because the plan will assume you signed up for Medicare, like you should have, and it will only pay the portion that Medicare does not pay….20%. And there is no stop loss on the 20%!
Click HERE to read the CMS official government booklet Your Guide to Who Pays First.
2. Is your current insurance with a Group Health Plan based on current, active employment for you or your spouse?
You or your spouse must be an active employee for you to remain on most group health plans and delay signing up for Medicare. That is because COBRA is NOT Credible coverage for Medicare and therefore you cannot delay signing up for Medicare if you are on Cobra.
If you go onto COBRA and do not sign up for Medicare, you will face the same penalties as mentioned above under the Medicare Secondary Payor Rule. That is because COBRA is not a Primary Payor to Medicare ever!
I have been asked if a Medicare Entitled person can remain on COBRA even after they sign up for Medicare Parts A and B. The answer is almost always NO. And usually a person’s reason for wanting to do that is not valid because of the good coverage found under either a Medicare Supplemental Medigap policy or an Advantage plan. The only time I have ever seen that to be a valid reason for considering staying on Expensive COBRA when paying for Medicare Part B is for the drug coverage. That was because they took a very expensive drug. But even in that case they did not even pursue staying on COBRA once the numbers were run so it was just going to be too expensive.
Next month our Blog post will delve into whether your non-Medicare-Eligible spouse (under age 65) will have the possibility of being offered 18 or 36 months of COBRA. If you need an answer regarding that question before we get that posted, please feel free to give Terri a call at 770-452-9335.