First, you should know that you as a retiree, you are eligible for Medicare as established under the rules guiding eligibility for the program. In fact, citizens are automatically enrolled into Part A of Medicare when they turn 65.
Medicare and Retiree Insurance
Retiree insurance refers to the insurance policy offered by your employer, or your spouse’s employer, upon retirement from the job. Medicare is, however, a federal health insurance program maintained by the Centers for Medicare and Medicaid Services. Medicare will serve as the primary health insurance plan and retiree plan is always secondary if an individual has both. Individuals are expected to foot the premiums of both plans themselves, although employers normally pay the premium directly to the insurance provider as part of employment benefits. The premium paid to the provider usually reduces post-retirement as employers are not obligated to provide the same coverage as when you were working.
Nature of Retiree Insurance
Retiree insurance varies widely depending on the provider as well as the employer or organization. To know what your retiree insurance plan covers and what you will incur as out of pocket costs, it is important to contact your plan’s benefits administrator. Also, note that retiree insurance may require enrollment in Medicare Parts A and B as a prerequisite for payment of medical fees. Retiree plans pay second and Medicare pays first.
Weigh your options
It is important to carefully consider which plan or combination of plans best suits your pocket as well as your needs. You may opt for:
- Original Medicare and retiree plan combined
- Original Medicare and a Medicare Supplement Insurance Plans (with or without Part D Prescription Drug coverage)
- A Medicare Advantage Plan (with or without Part D Prescription Drug coverage)
You should also find out whether your retiree plan provides extra benefits that are not covered under Original Medicare. Some retiree plans also cover health bills of family members while others do not. All these factors need to be examined holistically before a decision can be made. You may need to seek professional advice before arriving at a final decision as it is always better to get it right from the onset. Switching from one plan to the other or from one option to the other within the same plan may attract extra payments leading to unnecessary waste of resources.
What if I don’t sign up for Medicare because of my retiree insurance?
You should remember that even if you have retiree health insurance or you have COBRA (Consolidated Omnibus Budget Reconciliation Act), Medicare automatically attains primary provider status immediately once you are enrolled. Medicare is responsible for the payment of most of the health care costs you incur and your retiree plan can then pay for costs not covered by Medicare. However, if you fail to sign up for Part B of Medicare when eligible, your retiree plan may refuse to pay for your coverage during the period which you were eligible but failed to sign up. Some plans also require signing up for Medicare Plans A and B before you can enjoy full benefits from the insurance coverage.
What if I delay enrolling in Part B because of my retiree plan?
Did you know that delaying enrollment into Medicare Part B may cause you to have a penalty? This penalty is for life and is not capped. If this applies to you, you will be required to pay 10% of the Part B premium for every full 12 months you were eligible to enroll but did not. You should also be aware that enrollment is not year-round and that you may only be given the chance to enroll during the Part B General Enrollment Period. The General Enrollment Period spans between January 1st and March 31st of each year and coverage begins on July 1st of the enrollment year.
You will not have to pay the penalty if you qualify for a Special Enrollment Period (SEP.) You might qualify for an SEP if you had health insurance through your job or your spouse’s job when you were first eligible to sign up for Medicare Part B. This is considered creditable coverage.
Many people delay enrolling in Part B of Medicaid because of their retiree coverage. If you fall under this category and are thinking of delaying your enrollment, you should confirm that your current retiree coverage is considered “creditable.” If not, you may be subjected to the Part B late enrollment penalty.