By 2026, about one in three Americans between the ages of 65-74 are expected to be in the labor market, according to data from the Bureau of Labor Statistics. For employers and older employees, that reality creates a complex dynamic regarding Medicare coverage and health care benefits offered by employers.
Speaking generally, if a company has 20 or more employees, an employee aged 65 or older can delay enrolling in Medicare coverage.
“If an employee aged 65 or older meets the criteria to delay Medicare, they should make a choice,” according to Tricia Mahoney, a client manager at The Horton Group. “If they stay with employer-sponsored insurance, they do not want to be on an ER plan and pay Medicare Part B premium, if their employer plan is primary.”
Anyone covered under an employer group plan with an employer with less than 20 employees must enroll in Original Medicare Part A and Original Medicare Part B during their Initial Enrollment Period to avoid a Late Enrollment Penalty.
As an HR professional, you can refer employees to a Medicare agent who is qualified to discuss the topic. That individual will play a key role in offering direction to older employees considering a potential change in their health care plan.
“An HR person should be concerned with two aspects of employees health care plans for Medicare-aged employees: the number of employees and whether or not the drug coverage is creditable,” Mahoney said. “These factors determine whether or not someone can delay Medicare at age 65 without penalty. It is critical that employees receive accurate information so those who must enroll to avoid penalty can do so.”
Mahoney offered some insight on questions employees might ask as they ponder a switch to Medicare and how HR professionals can guide them. Here are the top four questions:
1. Can I Keep My Doctor?
This question comes up for anyone switching any health insurance plan. The best advice is to ask your employee to do a bit of research.
“A doctor must be contracted with Medicare,” Mahoney said. “Someone interested in a Medicare Advantage plan should check the network for that plan to see if their doctor participates. Medicare Supplement plans do not have a provider network; however, the provider must be contracted with Medicare.”
2. What Happens to My Prescription Drug Coverage If I Don’t Switch?
A Medicare drug plan is not required. Suppose someone goes without creditable drug coverage for 63 days or longer. In that case, they are subject to a lifetime late enrollment penalty for every month without creditable coverage if they decide to enroll on a Medicare drug plan later. Those who stay on employer-sponsored insurance must show have creditable drug coverage, meaning the coverage a company offers must be in line with the standard Part D plan.
“The out-of-pocket cost for prescription medications may be higher under Medicare than under an employer group plan,” Mahoney said. “Those with access to creditable drug coverage should review their costs under Medicare before leaving the employer plan.”
3. Will I Save Money?
Mahoney said this is going to be based on a person’s circumstances.
“Medicare may be less costly for some if they are on a high deductible health plan with their employer or if their employee contribution toward health care is high,” she said. “Medicare Part B is required to enroll on a Medicare Supplement plan or a Medicare Advantage plan. There is a premium for Medicare Part B that should be taken into consideration. Medicare-eligible individuals should consider the Part B premium and the premium for a Medicare Supplement plan and stand-alone prescription drug plan and the out-of-pocket cost for medications. Suppose the person is considering a Medicare Advantage plan. In that case, they should look at the plan premium (if any) and the medical maximum out of pocket for the plan, as well as the out-of-pocket cost for prescription medication.”
4. What About My Dependents?
If your spouses and children are part of an employees’ company-sponsored insurance, that may be a motivating factor in them opting to delay Medicare enrollment.
“My best recommendation for those reaching Medicare age or those considering a switch to Medicare is to seek advice from someone qualified to discuss Medicare,” Mahoney said. “What is true for one person may not be true for another.“
Learn more about guiding employees through Medicare enrollment here.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.