What’s better; keeping your Employer’s Health Coverage or Medicare?
Are you still working and 65 or almost 65? Then it’s time to think about your Employer Coverage and Medicare. There are several things to go over because you will have the option to keep your employer coverage, switch to Medicare or combine both. It is important to compare your employer’s health coverage to medicare plans to make sure you are not overpaying for your policy.
How to review the costs of your Employer Coverage to Medicare
Research can help you decide which plan is most cost-effective and will help you to avoid late penalties if you sign up too late for Medicare. With our Medicare plan finder, you can get an overview of different plans, what they cost and what they cover, so you can ensure that you are not overpaying for health insurance if you stay with your employer’s insurance. One of our licensed insurance agents can help you determine what would be better for your situation.
One of the first things to check is how many employees your employer has.
This will determine whether you have to sign up when you turn 65 or if you can delay signing up.
When are you able to sign up for Medicare?
Your sign-up window is from 3 months before your birth month, when you turn 65, to 3 months later. It would be best if you enrolled in Medicare Part A and Part B during this sign-up window to avoid penalties. If you don’t register in time, you may have to pay the fine for parts B and D.
- Late Enrollment Penalty part B: Your monthly Part B premium could be 10% higher for every 12 months you were eligible for Part B.
- Late Enrollment Penalty part D: For each month you delay enrollment in Medicare Part D, you will have to pay a 1% Part D late enrollment penalty (LEP)
How does Medicare work with employer insurance?
Medicare rules for employers with more than 20 employees
A: If you work for a large company and your employer has Group Health Insurance.
You can combine Medicare with your employer’s insurance; Medicare can coordinate benefits with your employer’s coverage. In most cases, Medicare will be your secondary insurance, and your employer insurance will be your primary insurance. Your employer’s group plan will pay first, and Medicare will pay second. Remember that Medicare Part A doesn’t come with a premium if you worked at least ten years in your life and that your deductible or other costs could be lower. Because of this, most people who are still working will sign up for Medicare part A
This is different for part B since you will most likely have to pay a premium for part B. For this reason, some people wait to sign up for part B until their employer’s group plan ends when they retire. If you choose to do this, you will receive a creditable cover letter that you must show when applying for Medicare Part B or D to avoid late penalties.
B: If you work for a large company and your employer has COBRA.
With COBRA, Medicare coordinates the opposite way; Medicare will pay first, and then COBRA will pay second. Once you turn 65, you must enroll in parts A and B to avoid late enrollment penalties. If you have COBRA, reviewing your employer’s health coverage to Medicare is essential to determine if you are paying more than you need to.
You can also drop your Employer’s Health Insurance and go on Medicare (potentially the most cost-effective)
Even if you work for a large company, delaying signing up for Medicare could cost you more. It might be better to leave your group plan and choose Medicare as your primary insurance to prevent this. In some situations adding Medigap to your policy could be more cost-effective since it can lower out-of-pocket costs, such as deductibles and copays. Another option is a Medicare Advantage Plan, which combines medicare parts A, B, and D plus extra benefits such as hearing, vision, and dental coverage. Many people don’t know that they could end up paying more for their health insurance through their employer than if they had switched to Medicare with Medigap or an Advantage plan.
Click here to go to our plan finder to find out what you would be paying for a Medicare plan with the same coverage as your Employer’s Health insurance plan.
Medicare rules for employers with less than 20 employees
If you work for a company with fewer than 20 employees, you must enroll in Medicare parts A and B. This doesn’t sound very cost-effective since you are paying another premium for part B. Medicare is the primary insurance for smaller companies, and your employer’s group insurance will be the secondary. This means that Medicare will pay first, and your employer’s insurance will pay second. In some situations, you might be able to delay your part D enrollment if your group insurance has RX benefits. Having group insurance through your employer might not be worth it because having Medicare + Medigap insurance could be cheaper than your group insurance altogether.
Make sure to review plans to determine if staying with your Employers insurance is worth it or if a Medicare plan with Medigap or an Advantage plan would be cost-effective.
What is a copay?
A copay is a dollar amount (fixed) paid by employees when they use medical services. This could be a doctor visit with a $45 copay or an ER visit with a $300 copay.
What is Coinsurance?
An employee pays Coinsurance for medical services after she’s met her deductible. This is a percentage of the total cost—for example, a $200 doctor visit with a 10% coinsurance. After the employee has met the deductible, the employee would have to pay $20, and the insurance company would have to pay the remaining $120.
A licensed Insurance Agent can walk through all of this and determine if you should stay with your current employer coverage or if switching to another plan would be more effective. Click here to schedule a meeting with one of our Licensed Insurance agents.