Can I have Medicare and Employer Coverage at the Same Time?
Medicare eligibility and enrollment can be confusing, especially when you have existing health insurance through an employer. Here’s a comprehensive guide on how employer insurance works with Medicare, so you can make the best coverage decisions when you become eligible.
Why Understanding Employer Coverage and Medicare Matters
Figuring out how your employer insurance coordinates with Medicare is crucial. Mistakes can lead to gaps in coverage or unnecessary costs.
Whether you should enroll in Medicare health coverage as soon as you become eligible, or keep your employer plan a bit longer, depends on your specific situation.
This guide will help you determine the best approach, so you can maximize benefits and minimize expenses.
Outline of Key Considerations for Employer Health Insurance and Medicare
Below is an outline of the main factors to weigh when coordinating employer health insurance with Medicare enrollment:
- How does employer size impact coordination rules for Medicare?
- What happens when you’re eligible for Medicare but still employed?
- Should you enroll in Medicare right away at 65 or delay? Pros and cons.
- How does Medicare work with COBRA or retiree health plans?
- If you delay Medicare, how do you enroll later and avoid penalties?
- Can you keep contributing to an HSA if you enroll in Medicare?
- Is Original Medicare or Medicare Advantage better with employer insurance?
- Does your employer plan qualify for the Special Enrollment Period?
- What steps should you take if your employer coverage is ending?
- What happens if you have Medicare and employer insurance? Who pays first?
- Do you need supplemental insurance with employer coverage?
- How can you get help evaluating your options if you have employer health insurance?
Medicare and Employer Coverage Size Comparison
One key factor in coordinating employer insurance with Medicare is the size of your company.
At companies with 20 or more employees, the employer group health plan pays first and Medicare pays second. The employer is the primary payer and Medicare is the secondary payer.
At companies with fewer than 20 employees, Medicare plan pays first and the employer insurance company pays second.
There are exceptions though, especially for companies with less than 20 employees. The employer coverage can sometimes still pay first if you’re actively working.
The main takeaway is if your employer has 20+ employees, you may want to enroll in Medicare but keep the employer plan too. If your employer has fewer than 20 employees, you may be able to forego other coverage once on Medicare.
What If You’re Still Working and Turn 65?
Once you turn 65 you qualify for Medicare as primary insurance, you have a few options if you have employer group health insurance:
You can sign up for Medicare Parts A and part B while keeping your employer coverage. This allows you to delay retirement without risking penalties or gaps in coverage.
You may be able to delay Part B enrollment without facing a late penalty if you’re covered by an employer with 20+ employees. But you should still take Part A if premium-free.
You can delay all Medicare enrollment and keep only employer insurance if your employer has fewer than 20 employees or you’re in a retiree plan not subject to Medicare rules. But penalties can apply if you enroll in Medicare late so be very careful about staying on an active employer plan past 65 without at least Part A.
If retired but not yet 65, you usually need to enroll in COBRA from your former employer to avoid gaps between work insurance ending and Medicare eligibility.
The cost and benefits of employer vs. Medicare coverage often determine the ideal strategy. Speaking with your employer’s benefits administrator or a licensed insurance agent can provide tailored guidance for your situation.
Key Pros and Cons Medicare Enrollment at 65
Should you sign up for Medicare as soon as you become eligible at 65 even if you have employer coverage? Here are some key factors to weigh:
Potential advantages of enrolling in Medicare at 65:
Access to Medicare benefits like hospital insurance coverage not always offered by employer plans
More overall coverage by having both Medicare and employer insurance
No risk of Medicare late enrollment penalties down the road
Chance to get Medigap to supplement employer insurance
Potential disadvantages of enrolling in Medicare at 65:
Higher premium costs for Medicare Part B
Can’t contribute to Health Savings Account (HSA) once on Medicare
Employer private insurance might offer better coverage for your needs
Medicare becomes secondary payer responsible for less of the costs
As you can see, there are pros and cons to enrolling in Medicare when you become eligible at 65 while still employed. A lot depends on your employer health benefits vs. Medicare coverage.
How Medicare Works with COBRA and Retiree Plans
If leaving a job, you may have options to continue employer health benefits:
COBRA allows you to stay on your former employer’s plan for 18-36 months. You can delay Medicare enrollment during this time if employer has 20+ employees.
Retiree coverage enables certain former employees to stay on the group health plan. Medicare rules differ for retiree plans – speak to your benefits administrator.
If you have COBRA or retiree coverage from an employer, take time to understand how it coordinates with Medicare enrollment. Failing to sign up for Medicare when required can lead to lifelong penalties.
Avoiding Medicare Penalties if Coverage Ends
If you delayed Medicare enrollment because you had employer insurance, take action within 8 months of losing that coverage to avoid penalties.
You have a Special Enrollment Period lasting 8 months from the end of your employer insurance to sign up for Medicare without penalty.
After the 8 months, you may have to wait for the General Enrollment Period and pay lifelong penalties for late Part B and Part D enrollment. So don’t miss your Special Enrollment Period if employment coverage ends.
Can You Keep Contributing to an HSA on Medicare?
If you want to keep making tax-advantaged contributions to a Health Savings Account (HSA), be careful about signing up for Medicare. You cannot contribute to an HSA once you have enrolled in Medicare Part A or Part B.
An exception is if you delay Medicare enrollment due to active employment. In that case, you may contribute to an HSA if you have a High Deductible Health Plan through your employer. But you must drop the HSA once on Medicare to avoid tax penalties.
Medicare Advantage vs. Original Medicare with Employer Plans
You can pair employer insurance with either Original Medicare (Parts A and B) or a Medicare Advantage plan when you become eligible for Medicare. Here are key differences to understand:
Original Medicare – Gives you access to any provider accepting Medicare nationwide. You pay 20% coinsurance typically covered by employer plan.
Medicare Advantage – Plans like HMOs with networks and copays. Might provide coverage beyond Parts A/B but restrict your provider choice. Employer plan covers cost sharing.
Medicare Advantage plans often work well with employer coverage by minimizing your out-of-pocket exposure. But Original Medicare maximizes provider choice flexibility if that’s important to you.
Does Your Employer Plan Qualify for Special Enrollment?
The Special Enrollment Period allows you to sign up for Medicare outside the normal window if you lost qualifying employer coverage.
To use the Special Enrollment Period, your employer plan must meet Medicare’s minimum requirements for hospital and medical insurance coverage. Plans from small employers often fall short, so check with your insurer or benefits administrator.
Take These Steps If Your Current Coverage Is Ending
If your current insurance through an employer is ending, either because you’re retiring or the company policy is ending, take these steps to ensure continued coverage:
Find out when your coverage ends and mark it on your calendar.
Contact Medicare no less than 3 months before your insurance ends to enroll in Parts A and B.
Review Medicare Advantage plans and Medigap options to supplement Medicare.
Enroll in Part D prescription drug coverage to avoid penalties.
If retiring early, consider electing COBRA from your former employer to bridge the gap until Medicare.
Acting quickly preserves your ability to get Medicare coverage without interruption or penalties.
Who Pays First: Medicare or Employer Insurance?
Which type of insurance pays first depends on your employer size and other factors:
At companies with 20+ employees, the employer plan pays first and Medicare pays second.
At companies with fewer than 20 employees, Medicare pays first and the employer plan pays second.
If you have retiree coverage, Medicare may pay second regardless of company size.
For COBRA coverage, the above rules apply based on the former employer’s size.
If disabled, Medicare pays first for the first 30 months then employer plan pays first after.
Knowing which plan is primary vs. secondary payer is important to understand how the costs will be covered between the two insurance coverages.
Do You Need Supplemental Coverage?
With employer group health insurance, you often don’t need supplemental coverage like Medigap because your employer plan covers cost sharing required by Medicare.
However, it can provide extra protection against out-of-pocket costs not addressed by your employer’s Medicare coordination beyond hospital/medical.
If you have an HSA alongside employer coverage, you likely have a high-deductible health plan insufficient as supplemental insurance for Medicare. In that case, Medigap may be advisable if you want more complete coverage.
Where to Get Help Evaluating Your Medicare Options
Figuring out how Medicare works with your employer health insurance can be complicated. Don’t go it alone.
Consult your employer benefits administrator to understand how your group health plan coordinates with Medicare. An independent insurance agent can also provide guidance specific to your coverage situation.
The Centers for Medicare and Medicaid Services also has resources to help you decide whether to enroll in Medicare if you have employer coverage when first eligible at 65.
With a firm grasp of the rules, you can make an informed decision about when and how to enroll in Medicare to ensure you maintain comprehensive coverage now and in the future.
To Summarize Key Points:
- Employer size affects coordination with Medicare
- Consider Medicare even if still working at 65
- Weigh pros and cons of enrolling in Medicare right away
- rules differ for COBRA, retiree coverage, and under 20 employees
- Use Special Enrollment Period if employer coverage ends
- HSA contributions stop once you enroll in Medicare
- Both Original Medicare and Medicare Advantage can pair with employer plans
- Check if employer coverage qualifies you for Special Enrollment
- Act quickly if your current coverage is ending
- Who pays first depends on employer size and other factors
- Supplemental coverage may provide extra protection
- Get help from experts to evaluate your specific situation
I’m Here to Help
You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give Nick Boushay a call at (888) 508-1781. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.
Should I enroll in Medicare if I have health insurance through my current employer?
Yes, employer insurance and medicare work together. You should still enroll in Medicare when eligible, even if you have employer coverage.
Can I keep my employer health insurance and also be on Medicare?
Yes, you can have both employer insurance plan and Medicare. Medicare will be primary or secondary depending on your employer size.
What if my employer has 20 or more employees?
If your employer has 20+ employees, their health insurance coverage is primary and Medicare is secondary.
When should I apply for Medicare benefits?
You should apply for Medicare 3 months before turning 65 to avoid penalties or gaps in coverage.
Do I need to enroll in Medicare Part B if I keep my employer health plan?
Yes, you should enroll in Medicare Part B when first eligible to avoid lifetime penalties.
Should I get a Medicare Part D prescription drug plan?
If your employer coverage is not creditable, you need a Part D plan. If it is creditable, Part D is not required. Speak with a licensed insurance for further advice.
Can I delay enrolling in Medicare if I have employer coverage?
Yes, you can delay Medicare if you have health coverage through current employment.
What happens when my employer health coverage ends?
When employer coverage ends, you have 8 months to sign up for Medicare without penalty.
Will Medicare or my employer insurance pay first?
If your employer has less than 20 employees, Medicare pays first. If 20+ employees, employer insurance pays first with their group health coverage.
Should I speak to an insurance agent about Medicare enrollment?
Yes, speaking to a licensed insurance agent can help you understand your options and coordinate employer and Medicare coverage.
If I’m under 65 and on Medicare for disability, is it primary?
Yes, for those under 65 on Medicare for disability, Medicare is the primary payer.
When can I enroll in a Medicare Advantage plan?
You can enroll in a Medicare Advantage plan when you first enroll in Medicare and also during the annual open enrollment period.