Q: I’m turning 65 later this year. I currently receive my healthcare insurance through my wife’s employer. How does Medicare work with this insurance? May I delay enrolling in Medicare?
A: This is a great question to ask, because working under the wrong assumptions about Medicare and your current group health insurance could wind up costing you a lot out-of-pocket. Once you turn 65, if you are entitled to Medicare and currently covered by employer insurance, you are subject to what are known as “primary payer” rules.
The “primary payer” pays what you owe in medical bills first, and then sends the rest to the “secondary payer” to pay some or all of the remaining costs. Here’s the key thing to know: Size matters! The primary payer is determined by the size of the employer. Medicare is the primary payer if your spouse’s employer has fewer than 20 employees. Medicare is the secondary payer if your spouse’s employer has 20 or more employees.
Your spouse’s employer plan pays first, and Medicare pays second when ALL the following apply:
- You’re 65, but your spouse is still working;
- You’re covered by your spouse’s current group health plan coverage;
- Your spouse’s employer must have 20 or more employees.
When your group health plan doesn’t pay all of your bill, the healthcare provider should send the bill to Medicare for secondary payment. Medicare may pay based on what the group health plan paid, what the group health plan allowed, and what the doctor or health care provider charged on the claim. You may have to pay any remaining costs that Medicare or the group health plan doesn’t cover.
If your group health plan is the primary payer (at least 20 or more employees) then you may be considering whether you can delay enrollment in Medicare if it would be more cost effective for you. (You can.) If you delay Part B enrollment, you will have a Special Enrollment Period (SEP) to enroll in Medicare at any point while covered by the employer plan OR up to eight months after the first month you are without that employer coverage.
Regardless, it’s a good idea to compare the cost of what you currently pay for your group health premiums, deductibles and co-pays, compared to dropping your group health coverage and getting Medicare. When comparing you will need to include the cost of Medicare Part B premiums, as well as a Medigap supplement and prescription drug coverage or Medicare Part B and a Medicare Advantage plan to replace your group health plan. It’s a different calculation for everyone, depending on your health and the prescription drugs that you take, and the generosity of your current benefits.
Free one-on-one counseling is available to do this through your state’s health insurance assistance program (SHIP). You can locate the contact information for your area at http://Shiptacenter.org. People who make appointment with these counselors frequently tell us how very helpful these sessions are!