How Does Medicare Work with Employer Insurance? 

Today in the United States, the average age of retirement is 63 years old. However, this number continues to rise over as more people hold off their retirement until their late 60s and beyond. 

Many of those who decide to stay at work longer usually remain enrolled in their employer’s group health insurance plan. Even though you may be eligible for Medicare when you turn 65, you may consider delaying some parts of enrollment. If you have comparative health insurance coverage through a group, you may delay Part B and Part D coverage. On the other hand, many people enroll in Medicare Part A even when they have health care coverage through employment.

If you’re still working and have access to group or employer coverage when you turn 65, you may be considering your options. Understanding how Medicare may work with other health insurance may help you make the decision that’s right for you. 

Does Medicare work with employer or group insurance? 

If you’re enrolled in a health insurance plan at work or through your spouse’s work, have other retiree coverage, or qualify for Medicaid insurance together with Medicare, each of the plans is considered a separate “payer.” One is the primary payer and the other is the secondary payer. 

Having two payers means that when you get health care services, the primary payer pays first up to the limits of the coverage it has agreed to in your policy. Then, the secondary payer pays if there are costs remaining – up to the plan’s limits. You may have remaining costs that neither the primary nor the secondary payer has agreed to pay, so you must pay for them out-of-pocket. 

This process explained above is called the coordination of benefits, and it decides which plan pays first, and which one pays second. Depending on the type of coverage, the coordination of benefits might be regulated by the state or federal governments or by large employer group plan providers.

It’s important to note that if your group health plan is your secondary payer, you might be required to enroll in Original Medicare Part B before you can get coverage from your secondary payer. 

Is Medicare always the primary payer? 

If you’re enrolled in Medicare and you also have coverage through a group health care plan, you can figure out which plan is your primary payer by the following criteria:

  • Your group insurance plan is your primary payer if your employer has 20 or more employees. In this case, Medicare is your secondary payer. 
  • Medicare is your primary payer if the employer offering group insurance has fewer than 20 employees and isn’t in a multiple-employer group health plan. 
  • Your group health plan is the primary payer even if your employer has fewer than 20 employees if the employer is a member of a multiple-employer group and at least one of the other members of the group has 20 or more employees. 

If your employer has 20 or more employees, he must offer the employees who are 65 and older the same health care benefits that employees under 65 get. The same is true for spouses who are over 65 – if the employer offers health care insurance to the spouses of all employees. 

Do you need to enroll in Medicare if you have insurance at work? 

If your health care insurance at work is comparable to Medicare coverage, you don’t have to enroll in Medicare Part B and Part D when you turn 65. You can wait until you retire or lose your group plan before enrolling in Medicare because you won’t have to pay a penalty in this case. 

However, if you qualify for premium-free Medicare Part A, you don’t have anything to lose if you enroll as soon as you become eligible. Most people get Part A premium free based on taxes paid while working for 40 quarters, or ten years.

If your employer has fewer than 20 employees and provides your health insurance, you may need to enroll in Medicare Parts A and B when you turn 65. In some instances, if you don’t enroll in Medicare your group plan might not cover all your costs. You should ask your employer whether you need to enroll in Medicare, so you get the amount of health care coverage you need.

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