Group Insurance Options
If you are covered under an employer group plan, you may still be eligible for coverage after you reach age 65 either as an active employee or as a retiree. You may also be eligible to purchase coverage through a voluntary association.
Employer Group Plans
If you are currently covered under an employer's group insurance plan, you should determine whether you have the option of continuing coverage or converting to suitable coverage to supplement Medicare before you decide to retire, become eligible for Medicare, or reach age 65. State and federal laws require many employers to offer continued health insurance benefits for a limited period of time if your group coverage ends because of divorce, death of a spouse, or termination of employment for reasons other than discharge for misconduct. You should check with your employer for more information.
If either you or your spouse plan to continue working after age 65, you need to take extra care in making insurance decisions. Your group insurance plan may not provide the same coverage you received prior to your 65th birthday.
Federal law determines when Medicare is primary payer and when it is secondary payer. The determination is based on whether you are defined as the employee or dependent under the group insurance policy, and on whether the group insurance policy is offered by an employer with 20 or more employees. You should submit a written request to your insurance company regarding the benefits you will have under the group insurance policy after you or your spouse become eligible for Medicare.
If you continue to work past age 65 and are covered under your employer's group health plan, the employer plan will be your primary insurance over Medicare if your employer has at least 20 employees. If you are 65 and are retired, but you are covered under your spouse's employer health plan and your spouse is still employed, that employer plan will be your primary insurance over Medicare if the employer has at least 20 employees.
If you continue to work past age 65 and the group insurance policy is offered by an employer who employs fewer than 20 employees, Medicare is the primary payer. The group insurance policy may calculate its benefit payment as if you were covered by Medicare regardless of whether you sign up for Medicare Part B benefits. This means that the group employer plan will pay only 20% of Part B expenses regardless of whether you have Medicare Part B that would have paid the 80%. In other words, you will be responsible for paying the 80% even if you are not covered by Medicare Part B. You will need to consider whether it is advisable for you to enroll in Medicare Part B at 65 or whether you can safely defer Medicare enrollment because of your own or your spouse's active employment status. You should contact your local Social Security office for a copy of Medicare and Other Health Benefits; Your Guide to Who Pays First. You may view this publication on-line at www.medicare.gov and click on Find a Medicare Publication; enter the CMS publication number 02179.
Your employer may offer a supplement to Medicare through a group retiree plan.
Remember: Employer group coverage is often available regardless of your health and usually does not include any waiting periods for preexisting conditions.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is the law that allows some people to keep their group health coverage for a limited period of time after they leave their employment. However, there are important timeframes that affect COBRA coverage when you are eligible for Medicare and Medicare supplement policies.
If you elect to get COBRA coverage when your employer coverage ends, you should enroll in Medicare Part B at the same time because you will not get another special enrollment period. The special enrollment period means you have to sign up for Medicare Part B within eight months after your group health plan coverage ends.
If you are age 65 or older and are covered under COBRA, your employer group health plan may require you to sign up for Medicare Part B. The best time to sign up for Medicare Part B is before your employment ends or you lose your employer's coverage. If you wait to sign up for Medicare Part B during the eight months after your employment or coverage ends, your employer may make you pay for services that Medicare would have paid for if you had signed up earlier.
If you have COBRA coverage when you first enroll in Medicare, your COBRA coverage may end. Your employer has the option of canceling your COBRA coverage if your first Medicare enrollment is after the date you elected COBRA coverage.
Additional information regarding COBRA coverage and Medicare Part B is available in the Choosing a Medigap Policy: Guide To Health Insurance For People With Medicare booklet, available at your Social Security office or on the Medicare Web site (www.medicare.gov) by requesting CMS publication number 02110.
Voluntary Association Plans
If you do not have adequate group health insurance, you may want to apply for a voluntary association plan. Many associations offer group health insurance coverage to their members. However, buying an insurance policy through an association group does not mean that you are getting a low premium rate. Association group insurance can be as expensive as or more costly than comparable coverage under individual policies. Be sure you understand the benefits included and then compare prices. Association groups that offer Medicare supplement insurance must comply with the same rules that apply to other Medicare supplement policies.