How Do Medicare & Large Group Health Plans Coordinate
May 13, 2021 By Danielle Kunkle Roberts
Your Original Medicare benefits will coordinate with your benefits from your employer group health plan while you are still actively working. If your employer has 20 or more employees, then Medicare will be a secondary payer after your group insurance. Its up to you whether you enroll in Part A or B or both to coordinate with your group coverage.
Here are some of the most common questions we receive about group coverage and Medicare.
What About Medicare Part D
Most employer group health plans include insurance for prescriptions that is as good as or better than Part D. This is called creditable coverage. If that is the case with your employer plan, you can safely wait until you retire to enroll in Part D. Just be sure that you elect a Part D drug plan within 63 days of losing your group health insurance. This will ensure you avoid a late penalty.
Some employer have high deductible health plans though, and these occasionally may not be as good as Part D. Thats considered non-creditable, which means youll owe a penalty later on for not enrolling in Part D when you were first eligible. Your employer must notify you if its coverage is non-creditable.
Remember these rules are for employees who work for companies with 20 or more employees. If you work for a smaller company, Medicare will be primary to your group insurance, and you should enroll in both Medicare Parts A & B. Check out our blog post for people with small employer insurance here.
Already Enrolled In Medicare
If you have Medicare, you can get information and services online. Find out how to .
If you are enrolled in Medicare Part A and you want to enroll in Part B, please complete form CMS-40B, Application for Enrollment in Medicare Part B . If you are applying for Medicare Part B due to a loss of employment or group health coverage, you will also need to complete form CMS-L564, Request for Employment Information.
You can use one of the following options to submit your enrollment request under the Special Enrollment Period:
- State I want Part B coverage to begin in the remarks section of the CMS-40B form or online application.
- If possible, your employer should complete Section B.
- If your employer is unable to complete Section B, please complete that portion as best as you can on behalf of your employer without your employers signature and submit one of the following forms of secondary evidence:
- Income tax form that shows health insurance premiums paid.
- W-2s reflecting pre-tax medical contributions.
- Pay stubs that reflect health insurance premium deductions.
- Health insurance cards with a policy effective date.
- Explanations of benefits paid by the GHP or LGHP.
- Statements or receipts that reflect payment of health insurance premiums.
Some people with limited resources and income may also be able to get .
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How Does Medicare Work With My Current Employer Insurance
I will turn 65 soon and be eligible for Medicare. I am still working and receive health insurance from my employer. If I sign up for Medicare, how will it work with my current employer-based insurance?
This is a common question. As more people continue to work past age 65 and receive employer health benefits, they have questions about Medicare coverage. Learning about how Medicare works with your current employer insurance can help you decide if you want to sign up for Medicare when you become eligible. Note that when we say current employer insurance, we mean insurance from either your or your spouses job.
The first thing to think about is whether Medicare will to your current employer insurance. Medicare paying primary means that Medicare pays first on health care claims, and your employer insurance pays second on some or all of the remaining costs. Medicare paying secondary means that your employer insurance pays first, and Medicare pays on some or all of the remaining costs.
Medicare works with current employer coverage in different ways depending on the size of the employer. For people who are eligible for Medicare because they are 65 or older, Medicare pays primary if the insurance is from current work at a company with fewer than 20 employees. This is called a small group health plan. Medicare pays secondary if the insurance is from current work at a company with more than 20 employees. This is called a Group Health Plan .
General Tips For Working Members Age 65 And Older
Four months before your 65th birth month you will receive a letter from CalPERS titled Important Information Concerning Health Coverage at Age 65. This notice contains information regarding the CalPERS Medicare enrollment requirements. We encourage you to carefully review and save this letter for future reference.
We recommend you also review and save all mail received from the Social Security Administration , as it will contain valuable information regarding your Medicare enrollment. You may remain enrolled in a CalPERS Basic health benefits plan until retirement. When you retire, you’ll no longer be eligible to remain in a CalPERS Basic health plan if you are eligible for Medicare Part A at no cost.
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When You Decide To Retire
For a smooth transition from a CalPERS Basic to a CalPERS Medicare health benefits plan, you are encouraged to enroll into Medicare Parts A & B prior to or within 30 days of retirement. Timely enrollment allows us to receive notification of your enrollment electronically and automatically transition you into a CalPERS Medicare health benefits plan. You will not need to send any additional documentation to us if:
- Your enrollment is more than 30 days from retirement, you may be required to provide supporting Medicare documentation to CalPERS.
- Your CalPERS Basic health plan has a corresponding Medicare health plan, you will be automatically transitioned to the CalPERS Medicare plan with your carrier. If your Basic plan does not have a corresponding Medicare plan, you will be transferred into UnitedHealthcare . If UnitedHealthcare is not available where you live, you will be transferred into PERS Choice .
You have 60 days from the date of enrollment in a CalPERS Medicare plan to elect a different plan by contacting CalPERS at 888 CalPERS .
You’re able to enroll in Medicare Parts A & B online with SSA by contacting SSA at 772-1213 or by visiting your local Social Security office. Call first to make an appointment.
You may enroll in Medicare Part B by completing the following forms and applying directly with SSA.
How To Determine When Medicare Is Primary
MEDICARE | September 27, 2019
About a year ago, we posted an article about Medicare Premium Reimbursement Arrangements, which allow small employers to pay for the Medicare Part B, Part D, and supplement premiums for their active employees. As explained in the article, the employer cannot force older employees off of the group plan , but it can often be a win-win solution for both the employer and the employee.
The one caveat mentioned in the article is that this strategy only works when Medicare is primary. The Medicare Secondary Payer rules kick in when a group has 20 or more employees , and the MSP rules prohibit an employer from incentivizing an employee to drop off the group plan and sign up for Medicare.
So that raises a couple questions about timing:
The answer to both of these questions can be found in a 2017 training course developed by CMS. The course discusses employer size as it relates to MSP for working age adults, people with a disability, and people with ESRD . Some of those topics are beyond the scope of this article, but it is worth reviewing the CMS slides if you market either group or Medicare-related products.
To help clarify the rules, CMS provides the following example:
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If I Have Employer Health Insurance Should I Still Sign Up For Medicare Part A
In most cases, yes. Employees of large companies can take advantage of Medicare secondary payer benefits. Your Part A benefits will cost nothing if you have worked at least 10 years in the United States. Allowing Part A to coordinate with your group insurance could reduce your hospital bill in some situations. The main exception to this is if you have a Health Savings Account. Read more on that next.
Medicare Part A & Group Health Coordination
Most Medicare beneficiaries who are still working at age 65 choose to enroll in Medicare Part A. Thats because Part A can limit your hospital spending to $1,556 if you ever have a hospital stay.
Lets say your group health insurance has a $5000deductible. This is a pretty considerable financial exposure, especially forsomeone who will retire in a few years. If this person has a hospital stay ofeven just 1 or 2 days, the likelihood that he would spend that $5K toward hisdeductible is pretty high.
However, this same person can enroll in Part A at age 65 and let Part A coordinate with this group insurance. Then that same hospital stay would cost him only $1,556 . Medicare would pay the rest of any charges for the hospital stay itself. Wow! Part A doesnt cost him anything if he has worked at least 10 years in the United States. Enrolling in it at age 65 is a no-brainer.
This all works beautifully unless that group healthinsurance plan is HSA-compatible, and you are actively contributing into ahealth savings account. Read on to find out why.
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Will My Health Insurance Premium Go Down If I Enroll In A Different Medicare Part D Prescription Drug Plan
Retirees only: No. Your health insurance premium includes both medical and prescription drug coverage. If you choose to enroll in a different Medicare Part D plan, you will be dropped from the Navitus MedicareRx plan and you will have to pay an additional premium to the other plan you enroll in. However, you will still have secondary coverage with the supplemental wrap benefits under the State of Wisconsin Group Health Insurance Program. There is no partial refund of the State of Wisconsin Group Health Insurance Program premium if you choose to enroll in a different PDP. Navitus will coordinate coverage with Medicare and pay secondary claims after Medicare processes your prescription claims from the other Medicare Part D plan, minus the applicable copayments and coinsurance that are your responsibility. If you enroll in another Medicare Part D plan, and you intend to stay in that program, notify ETF immediately. If ETF enrolls you in Navitus MedicareRx, you may be automatically disenrolled from your other plan by CMS.
What Is Group Health Insurance
Group health insurance is also known as employer-sponsored health insurance. Group insurance health plans provide coverage to a group of members, usually a company or organizations employees. Employees usually receive insurance at a reduced cost because the insurers risk is spread across a large group of policyholders.
These kinds of insurance plans can only be purchased by groups, making individuals ineligible for this type of coverage.
Although all group health insurance plans are different due to variations in costs, health insurance companies, group plan types, and plan specifications, they do have similarities.
Group health insurance plans typically share the following characteristics:
- Group medical insurance plans often require a 70% participation rate
- Members have the choice of enrolling in or declining health coverage
- Premiums are shared between the company and its employees
- Family members and dependents can be added to group plans at additional cost
Typical group health plans include health maintenance organization plans and preferred provider organization plans. While HMO plans have the advantage of lower premiums due to fewer providers within a specific network, they provide less flexibility in terms of how members can receive medical care.
PPO plans have greater flexibility and options for seeing doctors and specialists at the expense of higher premiums.
Cigna Group Support Services
As your retiree health coverage partner, Cigna provides guidance, tools, and resources to manage your group Medicare plans.
Services provided to you include:
Retiree Drug Subsidy Support:
- Help running the RDS application
- Submission of eligibility and cost reporting
- Reporting supplied in the proper formats based on program guidance
- Step-by-step guidelines for the implementation process
- Customer service center with representatives experienced in retiree coverage
- Communications that help boost retiree satisfaction
Medicare And Employer Coverage: Coordination Of Benefits
Lets say youre going to keep your employer coverage and also apply for Medicare. Medicare coordinates benefits with your employer coverage. Which insurance pays first? That is which is the primary payer?
The size of the employer helps determine who pays first.
- If you work for a company that employs 20 employees or more, your employer coverage usually pays first. Medicare is the secondary payer, paying its portion for covered services your employers group health coverage did not pay. You might still have to pay a deductible and/or copayment or coinsurance amount.
- If you work for a small company of fewer than 20 employees, Medicare usually pays first and your employer coverage is the secondary payer. Be mindful, however, of employer coverage that has a Health Savings Account feature you typically can only contribute to your HSA for the portion of the year when you arent covered by Medicare.
Do you have questions about your Medicare coverage options and how to compare costs with your employer coverage? You can call us and speak with a licensed eHealth insurance agent. You can also begin exploring your Medicare plan options right now by clicking Browse Plans on this page.
The product and service descriptions, if any, provided on these eHealth web pages are not intended to constitute offers to sell or solicitations in connection with any product or service. All products are not available in all areas and are subject to applicable laws, rules, and regulations.
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What It Means To Pay Primary/secondary
- The insurance that pays first pays up to the limits of its coverage.
- The one that pays second only pays if there are costs the primary insurer didn’t cover.
- The secondary payer may not pay all the uncovered costs.
- If your group health plan or retiree health coverage is the secondary payer, you may need to enroll in Medicare Part B before your insurance will pay.
If the insurance company doesn’t pay the
promptly , your doctor or other provider may bill Medicare. Medicare may make a conditional payment to pay the bill, and then later recover any payments the primary payer should’ve made.
Applying For Medicare After Turning 65
If you apply for Medicare Part A after you turn 65, your Part A will become retroactive for up to 6 months. Therefore, if you plan on applying for Part A after you turn 65, you will want to stop contributing into your HSA up to 6 months prior to signing up for Medicare. If you dont, you could end up facing penalties.
However, if you plan on enrolling in Medicare before your 65th birthday month, then you can continue contributing to your HSA all the way up until the day before your Medicare is effective. This is because your Part A shouldnt be retroactive if you apply for it prior to turning 65.
For example, if Paul plans to sign up for Medicare at age 67 in June 2021, then his Part A will be retroactive 6 months to December 1, 2020. Therefore, Paul should stop his HSA contributions prior to December 1, 2020.
Heres another example of when someones Part A would be retroactive to the first of their 65th birthday month.
If Alex turns 65 in October 2020, but doesnt apply for Medicare until February 2021, then his Part A will be retroactive to the first of October, not the full 6 months. Therefore, Alex should stop his contributions no later than the day before October 1, 2020.
Youll need to speak with your accountant about anypenalties you may owe for contributing into your HSA over the prior six months.
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D: Prescription Drug Plans
Medicare Part D went into effect on January 1, 2006. Anyone with Part A or B is eligible for Part D, which covers mostly self-administered drugs. It was made possible by the passage of the Medicare Modernization Act of 2003. To receive this benefit, a person with Medicare must enroll in a stand-alone Prescription Drug Plan or public Part C health plan with integrated prescription drug coverage . These plans are approved and regulated by the Medicare program, but are actually designed and administered by various sponsors including charities, integrated health delivery systems, unions and health insurance companies almost all these sponsors in turn use pharmacy benefit managers in the same way as they are used by sponsors of health insurance for those not on Medicare. Unlike Original Medicare , Part D coverage is not standardized . Plans choose which drugs they wish to cover . The plans can also specify with CMS approval at what level they wish to cover it, and are encouraged to use step therapy. Some drugs are excluded from coverage altogether and Part D plans that cover excluded drugs are not allowed to pass those costs on to Medicare, and plans are required to repay CMS if they are found to have billed Medicare in these cases.