How Do Medicare and Employer Health Insurance Work Together?

It’s good to have choices in life.

It’s even better when you make the right choice.

If you opted against enrolling in Medicare Part B when you turned 65 because you had medical insurance through your job or your spouse’s job, then you already tackled a crucial decision related to Medicare.

But just because it was the right choice for you yesterday doesn’t mean it’s the right choice today.

Since costs associated with employer-sponsored health plans change all the time, it might make sense for you to switch to Medicare or perhaps even add Medicare to supplement your existing plan.

How do you determine if it’s time for a change? And if it is time, how do you make that change?

Let’s dive in.

This one usually is pretty straightforward but is worth mentioning: If you’re 65 or older and your employer health coverage ends, Medicare is waiting for you.

Just don’t wait too long.

When you leave a job that provides health insurance, that launches an eight-month Special Enrollment Period that allows you to sign up for Medicare without the lifetime late penalty that you otherwise would incur for enrolling after age 65. You probably knew that when you opted not to enroll in Medicare Part B during your Initial Enrollment Period surrounding your 65th birthday, but it bears repeating.

You probably won’t be waiting eight months though, since Medicare is a group health insurance plan on a grand scale that helps pay for medical expenses as you get older.

“Should I enroll in Medicare if I have employer insurance?”

While the decision to enroll in Part B after you no longer have employer insurance can be a pretty obvious one, it might also be obvious that you should pass on Part B if you have an employer plan.

But you still need to keep a couple of things in mind because there are exceptions.

If you carry both an employer plan and Part B, Medicare defines a “primary payer” and a “secondary payer,” referring to which insurance pays toward your medical expenses first.

• If you’re on an employer plan for a company that has 20 or more employees, then that plan is the primary payer. Often, Part B as the secondary payer will be left to pay little or nothing, so adding Part B coverage often isn’t cost-effective.
• If, however, your company has fewer than 20 employees, then Medicare is the primary payer. That means there are scenarios where carrying both could make sense. Your employer’s benefits department should be able to help sort out your options.

As mentioned before, pairing Part A with an employer plan makes sense in many cases because Part A typically doesn’t charge a premium and therefore can provide no-cost assistance in support of your employer plan if you require hospitalization.

You may be asking yourself by now, “Can I drop my employer health insurance and go on Medicare?”

Depending on the details of your employer insurance — including increased costs year over year — Medicare may be the right fit for you.

Monthly premiums for Medicare Part B historically increase each year, but so do employer premiums. If your employer plan experienced a more dramatic increase, or if you haven’t closely compared the benefits offered by your employer plan and Part B, a change could benefit you.

A GoHealth licensed insurance agent can help you determine which is right for you and also can introduce you to Medicare Advantage. Also known as Part C, Medicare Advantage plans don’t always have monthly premiums like Part B does but provide similar coverage. Our agents can review your situation, without cost or obligation.