Today, many people are working past the age of 65—the age most first become eligible for Medicare. But if you keep working, you may not need to sign up for Original Medicare until you retire or otherwise lose your employer sponsored insurance. Depending on the type of coverage you have when you first become eligible for Medicare, you may choose to have both employee health insurance as well as Original Medicare coverage (Parts A and/or B).
It’s important to understand how Medicare works when you have employer sponsored or retiree health plan benefits. It’s also essential that you inform Medicare about your other insurance so your medical bills get paid correctly and on time. You can do this when you first sign up for Medicare and fill out your Initial Enrollment Questionnaire.
Who Pays When
Medicare or any other health plan is called a “payer.” A payer is the party responsible for paying health care bills. When you are covered by more than one payer, there are rules that direct which payer pays first. The one that pays first is the primary payer. Your primary payer pays your medical bills up to the amount allowed by your coverage. If more is still owed, then the remaining amounts go to your secondary payer for payment. It’s important to know the difference because it can impact how much you have to pay out of your own pocket for the benefits and services you use.
Medicare is the primary payer if:
- You are at least 65 years old, are still working, and are covered by a group health plan through an employer with less than 20 employees. If the employer has 20 or more employees, then Medicare becomes a secondary payer and your employer group plan is the primary payer.
- You are at least 65 and covered by a retiree health plan through your former employer (of any size).
As the primary payer, Medicare will pay for any Medicare-covered benefits before your employer sponsored coverage contributes. It’s important to understand that even after the primary and secondary payer make payment on your bill, you may have an outstanding balance due. How much they will pay depends on what’s covered by your plan and what costs Medicare is responsible for covering.
Why It Matters
You have choices when you sign up for Medicare. One key decision is whether to take both Part A (hospital insurance) and Part B (medical insurance).
In most cases, there’s no reason to not sign up for Part A when you first become eligible. It’s premium free for most people. However, if you have a high deductible plan, like a Health Savings Account (HSA), and you sign up for Part A while still working, you can no longer make contributions to your HSA plan. So before you decide whether to enroll in Part A, find out how it works with your current plan.
It’s a different story with Medicare Part B (medical insurance). You pay a monthly premium for Part B, so many people who still have employee coverage choose to delay enrolling in it until they stop working. However, employers with less than 20 employees may require you to take Part B when you turn 65. Talk with your employee health plan to find out how your plan works with Medicare.
–This information is provided by Medicare Made Clear
Jay Gray
Insurance Broker
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