Group Insurance Options
If you are covered under an employer group plan, you may still be eligible for coverage after you reach age 65 either as an active employee or as a retiree. You may also be eligible to purchase coverage through a voluntary association.
Employer Group Plans
If you are currently covered under an employer's group insurance plan, you should determine whether you have the option of continuing coverage or converting to suitable coverage to supplement Medicare before you decide to retire, become eligible for Medicare, or reach age 65. State and federal laws require many employers to offer continued health insurance benefits for a limited period of time if your group coverage ends because of divorce, death of a spouse, or termination of employment for reasons other than discharge for misconduct. You should check with your employer for more information.
If either you or your spouse plan to continue working after age 65, you need to take extra care in making insurance decisions. Your group insurance plan may not provide the same coverage you received prior to your 65th birthday.
Federal law determines when Medicare is primary payer and when it is secondary payer. The determination is based on whether you are defined as the employee or dependent under the group insurance policy, and on whether the group insurance policy is offered by an employer with 20 or more employees. You should submit a written request to your insurance company regarding the benefits you will have under the group insurance policy after you or your spouse become eligible for Medicare.
Employers With 20 or More Employees
If you continue to work past age 65, you are considered an active employee and your employer has at least 20 employees, your group plan will be the primary payer over Medicare. If you are 65, retired, covered under your actively employed spouse's group plan, and your spouse's employer has at least 20 employees, the group plan will be the primary payer.
In either of these cases, when the employee (you or your spouse) retires and is no longer considered an active employee, each Medicare eligible beneficiary (you and/or your spouse) should enroll in Medicare Part B (if not already enrolled). If you don't enroll in Medicare Part B and are allowed to continue your employer's group health plan, the group policy may pay only the 20% and you will be responsible for paying the 80%. This is because your group policy may calculate its benefit payment because you are eligible for Medicare regardless of whether you sign up for Medicare part B. Also, to apply for a Medicare supplement or Medigap policy, most insurance companies require that you have both Medicare Part A and part B.
Employers With Less Than 20 Employees
If you continue to work past age 65 but your employer has fewer than 20 employees, Medicare is the primary payer and your group policy is the secondary payer. If you don't enroll in Medicare Part B, your group policy may pay only the 20% and you will be responsible for paying the 80%. This is because your group policy may calculate its benefit payment as if you were covered by Medicare regardless of whether you sign up for Medicare Part B. If your spouse is covered under your employer's plan and becomes eligible for Medicare because of disability or retirement, your group policy may change to paying only 20% because Medicare is primary as soon as your spouse becomes eligible for Medicare.
You should contact your local Social Security office for the publication Medicare and Other Health Benefits: Your Guide to Who Pays First. You may view this publication online at www.medicare.gov and key in the title of the publication.
Remember: Employer group coverage is often available regardless of your health and usually does not include any waiting periods for preexisting conditions.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is the law that allows some people to keep their group health coverage for a limited period of time after they leave their employment. However, there are important time frames that affect COBRA coverage when you are eligible for Medicare and Medicare supplement policies.
If you didn't take Medicare Part B when you were first eligible because you or your spouse were working and had group health plan coverage through your or your spouse's employer or union, you can sign up for Medicare Part B during a Special Enrollment Period. You can sign up anytime you are still covered by the employer or union group health plan through your or your spouse's current or active employment, during the eight months following the month the employer or union group health plan coverage ends, or when the employment ends (whichever is first).
If you are age 65 or older and are covered under COBRA, your employer group health plan may require you to sign up for Medicare Part B. The best time to sign up for Medicare Part B is before your employment ends or you lose your employer's coverage. If you wait to sign up for Medicare Part B during the eight months after your employment or coverage ends, your employer may make you pay for services that Medicare would have paid for if you had signed up earlier.
If you have COBRA coverage when you first enroll in Medicare, your COBRA coverage may end. Your employer has the option of canceling your COBRA coverage if your first Medicare enrollment is after the date you elected COBRA coverage.
Additional information regarding COBRA coverage and Medicare Part B is available in the booklet Medicare & You, available at your Social Security office or go to the Medicare Web site www.medicare.gov.
Voluntary Association Plans
If you do not have adequate group insurance, you may want to apply for a voluntary association plan. Many associations offer group health insurance coverage to their members. Association plans are not necessarily less expensive than comparable coverage under an individual policy. Be sure you understand the benefits included and then compare prices. Association groups that offer Medicare supplement insurance must comply with the same rules that apply to other Medicare supplement policies.