Healthcare Benefits for Your Medicare Eligible Employees

Medicare is the federal health insurance program for many adults aged 65 and older. Medicare is also available for people under 65 with certain disabilities.

Medicare is made up of several components:

• Together, Medicare Part A and Part B are known as Original Medicare.
• Medicare Part C (Medicare Advantage) and Medicare Part D (prescription drug coverage) are different types of plans offered by health insurance companies that contract with Medicare.
• Medicare Supplement insurance plans (also called Medigap plans) are also available through health insurance companies.

With Original Medicare, individuals can choose to also enroll in a Medicare Supplement policy and/or a Medicare Part D prescription drug plan, or they can choose a Medicare Advantage (Part C) plan, when available in their area.

Learn more about Medicare basics

If an employee joins Medicare and has other health insurance (such as one from an organization’s group health plan), each type of coverage is referred to as a “payer.” When an employee has multiple health plans, determination must be made about who is the primary or secondary payer for claims. If the group health plan is the secondary payer to Medicare, an employee may need to sign up for Medicare Part B before the employer will pay. This order of payment is often referred to as coordination of benefits.

• Organizations with 20 or more employees
  • If you have working employees eligible for Medicare who get health coverage through your organization, and you have over 20 employees on payroll, Medicare is considered the secondary payer. These employees have the option to wait to enroll in Part B through the Social Security Administration until their group sponsored coverage ends. Most times these employees will have a Special Enrollment Period of 8-months after they or their spouse stops working to enroll in Medicare without incurring a late enrollment penalty. 
• Organizations with less than 20 employees
  • If your organization has less than 20 employees on payroll, Medicare is considered the primary payer. It’s recommended for these employees to contact Social Security to determine if enrolling in Medicare is needed based on their situation. 

Important note: If you have an employee or their spouse covered on your group health plan and they’re under the age of 65 and enrolled in Medicare because of a disability or condition, the Medicare Secondary Payer rule changes from 20 to 100 employees. For any organization with less than 100 employees, Medicare is considered the primary payer. Medicare is considered the secondary payer when any organization has 101 or more employees. 

For more information on Medicare late enrollment penalties and for employees to determine their situation, visit Medicare.gov, or they can contact Medicare directly to discuss.

Employee counts are based on full-time and part-time.

If you offer a Health Savings Account (HSA) to your employees or employees who choose to contribute to an HSA on their own, contributions to their HSAs are recommended to stop 6 months before they enroll in Medicare. This will ensure you avoid a tax penalty.

For more information, visit Medicare.gov.

The Part D late enrollment penalty applies if an individual enrolls in a Part D plan after their Medicare Initial Enrollment Period (IEP) ends. This lifetime penalty increases their monthly Part D premium. This additional cost and penalty can be avoided if the individual has creditable drug coverage (coverage similar in value to Part D) or qualifies for Medicare’s Extra Help program.

While Part D is optional, it’s recommended that individuals enroll when first eligible. If an individual does experience a late-enrollment penalty, CMS determines this amount and communicates that to them and their Part D plan.