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Medicare and employer coverage: do you have to apply for Medicare?

If you are turning 65 and still working, you might still be covered by your employer’s health insurance plan. Or, perhaps you get benefits through a spouse’s employer coverage.

Before you apply for Medicare, be aware that you might have several insurance options. For example, you may be able to:

  • Drop your employer coverage and enroll in Original Medicare, Part A and Part B. If you take this route, you might want to think about signing up for prescription drug coverage under Medicare Part D, and/or buying a Medicare Supplement plan. Medicare Supplement insurance can help pay the out-of-pocket costs of Medicare Part A and Part B.

Alternatively, you may have the option to receive your Medicare benefits from a Medicare Advantage plan.

  • Have both Medicare and your employer coverage?. Medicare and employer coverage will need to coordinate benefits, which means that either Medicare or the employer plan pays first for covered care. The other insurance is “secondary” and may also pay a portion of the costs. More on who pays first below.
  • Stay with your employer coverage and apply for Medicare later. Keep in mind that being eligible for Medicare doesn’t mean you have to take it. However, you might want to enroll in Medicare Part A (hospital insurance) as soon as you’re eligible, especially if you qualify for premium-free Part A. You generally qualify for Part A without paying a premium if you’ve worked at least 10 years (40 quarters) while paying Medicare taxes.

Later, when your employer coverage ends, you can apply for Medicare Part B. To avoid a late enrollment penalty for enrolling in Medicare, make sure you apply for Medicare during your Special Enrollment Period.

It’s important that you contact your employer-based health plan administrator to find out how the plan works with Medicare.

To get the best value and health insurance coverage for your situation, learn about your employer coverage costs, and your costs if you apply for Medicare. You’ll need to do a little research to determine the best arrangement for you. An eHealth licensed insurance agent would be happy to help you figure this out.

If you apply for Medicare, and keep employer coverage, what your the out-of-pocket costs?

If you apply for Medicare, be aware that it’s not free. Most people pay a monthly premium for Medicare Part B (medical insurance). However, you may be eligible to receive premium-free Medicare Part A (hospital insurance), as explained above. You may want to apply for Medicare Part A if you want when you are first eligible, and apply for Medicare Part B later when you lose your employer coverage. That might be a cost-conscious way to increase your insurance coverage if you decide to have both Medicare and employer coverage.

Medicare Part A and Part B have deductibles, copayments and coinsurance costs. For example, you’ll typically pay 20% after you’ve met your annual Part B deductible for medical services and supplies covered under Part B.

What about the other “parts” of Medicare – Part C (Medicare Advantage) and Part D (prescription drug coverage)? These Medicare coverage options might charge monthly premiums. And you still need to keep paying your Part B premium as well – if you have Part B. You must be enrolled in Medicare Part A and Part B to qualify for a Medicare Advantage plan under Medicare Part C.

It’s usually simple to find out your employer coverage costs. You can probably see the deduction in your paycheck for your health plan premium. If you’re happy with the coverage, and feel the costs are affordable, you may want to keep it.

Review the deductibles and coinsurance cost-sharing amounts of your employer coverage. Increasingly, employer coverage might also include deductibles and coinsurance or copayment amounts.

Deciding whether to apply for Medicare or keep employer coverage

You’ll probably want to consider what additional benefits, if any, your employer coverage includes, beyond coverage for doctor visits and hospital stays. For example, does it include routine dental, vision, and/or prescription drug coverage? You generally don’t get these benefits under Medicare Part A and Part B. Part A and Part B have limited coverage for prescription drugs, but generally don’t cover medications you take at home.

Also consider whether your cost for employer coverage includes coverage for your spouse. If it does, you’ll want to factor in the cost for your spouse to get coverage elsewhere before you decide to drop your employer coverage for Medicare. Medicare coverage is for individuals, not married couples or families.

On the other hand, you may be able to get the benefits listed above – routine dental care and prescription drug coverage, for example – through a Medicare Advantage plan.

Medicare and employer coverage: coordination of benefits

Let’s say you’re going to keep your employer coverage and also apply for Medicare. Medicare coordinates benefits with your employer coverage. Which insurance pays first? That is – which is the primary payer?

The size of the employer helps determine who pays first.

  • If you work for a company that employs 20 employees or more, your employer coverage usually pays first. Medicare is the secondary payer, paying its portion for covered services your employer’s group health coverage did not pay. You might still have to pay a deductible and/or copayment or coinsurance amount.
  • If you work for a small company of fewer than 20 employees, Medicare usually pays first and your employer coverage is the secondary payer. Be mindful, however, of employer coverage that has a Health Savings Account (HSA) feature – you typically can only contribute to your HSA for the portion of the year when you aren’t covered by Medicare. .

Do you have questions about your Medicare coverage options and how to compare costs with your employer coverage? You can call us and speak with a licensed eHealth insurance agent. You can also begin exploring your Medicare plan options right now by clicking Browse Plans on this page.

The product and service descriptions, if any, provided on these eHealth web pages are not intended to constitute offers to sell or solicitations in connection with any product or service. All products are not available in all areas and are subject to applicable laws, rules, and regulations.

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