Health Plan Rules: What Happens When Employees Are Medicare-Eligible?

As more older Americans stay in the workforce, employers may have questions about how employees’ Medicare entitlement impacts their group health plan coverage. Here are some things to consider.

Medicare or Employer Plan: Which Pays First?

Employers who sponsor group health plans that cover individuals enrolled in Medicare should understand the following:

• Medicare’s coordination of benefits rules, which determine whether the group health plan or Medicare pays first on claims. Learn more here.

• The Medicare secondary payer (MSP) rules, which prohibit many employers from taking into account an individual’s Medicare entitlement. Learn more here.

Medicare Part B: Who Must Enroll?

Medicare Part B helps cover services from healthcare providers, outpatient care, home healthcare, durable medical equipment and preventive services. The rules for who must enroll depend on the employer’s size:

• Employers with less than 20 employees: Employees participating in the company health plan must enroll in Medicare Part B. The government considers Medicare the employee’s primary insurance and the employer’s plan secondary coverage.
• Employers with 20 or more employees: Employees participating in the company health plan are not required to enroll in Medicare Part B. The employer’s plan is the primary payer for claims.

What Are Some of the Compliance Considerations?

Employers with group health plans that are primary to Medicare must comply with the following requirements:

• The group health plan must provide a current employee (or current employee’s spouse) age 65 or older with the same benefits under the same conditions it provides employees and spouses under age 65.
• The employer cannot offer Medicare beneficiaries any financial or other benefits as incentives to not enroll (or to terminate enrollment) in a group health plan.
• The group health plan cannot take into account an individual’s Medicare entitlement.

Note that employers with fewer than 20 employees have different compliance standards. Their employees are required to enroll in Medicare Parts A&B.

Consult an Employee Benefits Specialist

Employer health plan rules are complex, and businesses of all sizes must ensure they remain compliant. Contact Hylant for help understanding your benefit plan from a compliance perspective.

The above information does not constitute advice. Always contact your employee benefits broker or trusted advisor for insurance-related questions.