Coordination of Benefits for Medicare Eligible People

You will be turning 65 soon (become Medicare Eligible), but still plan on working for your employer for several more years. Do you need to take Medicare parts A and B? 

The answer is it depends. Below is a snippet from a Humana newsletter that tried to explain how it works (BTW, this is for almost all insurance companies/plans):

Coordinating Medicare and employer health plans isn't a complicated proposition if you know the facts. Active employees cannot be dropped from employer group health plans without violating the federal Age Discrimination Employment Act (ADEA) except in specific circumstances. Medicare secondary payer rules also prohibit employers from reducing health benefits to current employees because of their Medicare eligibility. Plus, the Equal Employment Opportunity Commission issued an informal letter late last year that advised the exemption for coordination with Medicare is only applicable to retirees, not current employees. As older workers delay retirement – or opt to forego retirement altogether, the need for clarity on how to navigate coordination of Medicare and employer-based insurance has become crucial.

Coordination requirements depend on the size of the employer-based healthcare plan.

Under a small group plan, defined as 20 or fewer employees, Medicare becomes the primary health coverage for eligible employees. The employee might not have health insurance if he or she declines Medicare Part B coverage, outpatient, and doctors benefits. Expenses of Part B-eligible employees who become injured and are covered by the group health plan can see the program stop payment – or attempt to recoup payments – creating a nightmarish scenario for employees. An employer who decides to remain the primary payer (an option currently allowed) must receive written confirmation from the employee and the health plan.

In large group plans of 20 or more employees, the amount of coverage employers must provide changes. The employee is not required to opt for Part B but can accept Part B as secondary coverage. When the employee stops working, Part B becomes the primary payer. In the case of a multiple-employer plan, the size of the largest employer dictates whether the group plan size is small or large and therefore, the category of coordination requirements and coverage to which all the employers in the group must adhere.

Additional guidance is available from several sources. National nonprofit consumer service group Medicare Rights Center, along with Cook County, Illinois-based AgeOptions, created a toolkit of educational materials on this subject. The toolkit, "How Medicare Works with Employer-Based Health Insurance: A Guide for Employers, Professionals and Consumers," is designed to help older workers knowledgeably make their way through the transition from employer-based health insurance to Medicare. 

Now in Illinois, if you are enrolled in an HMO plan for an employer with LESS THAN 20 employees, you actually do NOT need to get Part B as an HMO treats payments differently than other plans. That said, please check with your employer/health insurance agent FIRST to confirm that this is still the case in your situation.