Welcome to Medicare School Daily, where we help you understand Medicare, save money,
avoid mistakes, and above all else, get the most out of your Medicare benefits. Today's
topic is how does an employee group plan work with Medicare? We get lots of questions about
this. Lots of folks are working and ask, should I start Medicare while I'm still working?
Well, folks, that just depends. And so what I'm going to do today is address five different
issues regarding this question. Number one would be this: How many insureds are in the
group? This needs to be known because this is going to decide whether you're going to
even consider Medicare or not as an option while still working. So how many people are
covered in the group plan? Now, some of you are working for companies that have multiple
thousands. So that's pretty simple. But others of you, you're going to have smaller group
plans. So here's the way Medicare defines the size of the group. Number one: are there
20 or more in your group, meaning 20 more people that are insured by that particular
plan? Well, if that's the case, your group plan then is going to be the first one to
pay any bills, and then if there's a balance of those bills, then it could go to Medicare
for them to consider paying. Now, you've got to remember in regards to this, what is it
costing you to be covered by the group? Is your premium two hundred dollars a month or
three hundred dollars a month? Or what's it actually costing you, probably out of your
paycheck, to be covered by the group plan? That's an issue because remember, if you enroll
in Medicare, we have two parts to Medicare, A and that is zero premium, but B has a premium.
And so I'm shooting this video in 2020; right now the premium for part B is $144.60 a month.
If you're taking Social Security, which most of you probably are not, that would come out
of your Social Security check. And if you're not taking Social Security, they bill for
that on a quarterly basis. So it's going to be times three. So basically four hundred
fifty dollars every quarter for your part B. Now, if you're single and your adjusted
gross income is eighty-seven thousand or less, that number is correct. If it's above eighty-seven,
that's going to be more. If you're a married couple, you file jointly. Who's ever on Medicare,
either one of you or just one of you, if it's a hundred seventy-four thousand or less. That
is correct. But if you're above a hundred seventy-four thousand, then that number is
going to be higher. And so the whole point is this: As we look at this possibility of
going on Medicare while we're still working, this is question number one. How big is the
group. Now over here, if I have a premium that's costing me $200 to $300, then I also
got to pay Medicare.
And again, that may not be a very good financial move for you. And so you've got to consider
that. Now for those of you who are actually on small employer type plans, if you have
19 or less than the order of payor’s going to change. Medicare will pay first. So when
you go to the doctor or the hospital and you're in a small group plan, then those bills are
first going to go to Medicare. Medicare is going to pay their portion. And if you're
still covered by that group plan, then they're going to be the secondary payor. And again,
if I've enrolled in Medicare, in this instance here, I have A and B, so I'm paying for my
part B $144.60, and depending upon what that group plan is going to look like as far as
your premiums, then you're going to have to kind of calculate that into this particular
decision. I would tell you this, normally if someone is in a group plan that's less,
what we typically would do is tell them to go ahead and just drop the group plan entirely
and then have Medicare first. And then you would get some kind of a supplemental plan
to pay a second to Medicare. That's the normal situation when someone is in a group of 19
or less.
Now, by the way, you don't have to do this, but the official rules of Medicare is this:
if that group plan insurance company says that they want you to go on Medicare, they
actually can make you do that. Now, many of them do not. But if they said, yes, we want
you to go on Medicare, then in this situation, probably just drop the group plan entirely
and go ahead and take Medicare with a supplemental plan. Now, if you're in a group of 20 or more,
they cannot make you go on Medicare. Now, I know you'll have some people that are in
H.R. department, sometimes even co-workers, that will say, oh, you've got to get Medicare.
And folks, if your group is 20 or more, you do not have to do anything with Medicare whatsoever.
OK, so it is not true, but 19 or less, they could make you do that. All right. So that's
what we're going to do in a small group plan. But let's look at the fourth issue in regards
to this question. And you need to know, folks, that the Part B date of your Medicare is critical.
And I'm going to teach you why, because everyone has what we call a Medigap open enrollment
period, Medigap open enrollment period. This is also called a Medicare supplemental open
enrollment period. And so here's the way it works. Let's say your birthday's January 1956,
and that means that you're going to turn 65 on January 1, 2021.
So if you decide to enroll into Medicare your birth month again January of 2021, your A
date would be 1/1/2021, and your B date is going to be 1/1/2021, and when we say the
beat, it is critical, here's the reason. Because this Medigap open enrollment period, which
is tied to you, this is not Medicare's open enrollment period or Medicare's annual enrollment
period. This is tied to you. And that date is tied to your B date, and this open enrollment
period for you lasts six months. And that's it. And what that means is during the six
months of this Medigap open enrollment period of your B date, you have the right, once in
a lifetime right, to have any Medigap policy that's sold in your state, regardless of your
health conditions, which means pre-existing conditions are of no concern here. Any kind
of health issues, whether it be minor or major, are of no concern whatsoever, because six
months of your B date, if you want to get a supplemental plan, then those companies
that offer those plans in your state have to issue the policy regardless of your health.
They have to give you that policy. So in my example, our B date is January 1, 2021; six
months would be January, February, March, April, May, June. So during those six months,
January to June, anything you want, but notice after July 1, my open enrollment period is
now over now from July 1 on 2021, if I ever want to pick up a supplemental plan, now you're
going to have to medically qualify to do that.
And if your health is questionable, you have serious health issues going on, sometimes
even a few minor health issues going on, you may never be able to pick up that supplemental
plan again because the six months they must take you. But after that they do not. And
that's why we're saying that Medicare Part B date is critical. So as you make this decision,
whether you're going to get Medicare, whether you're working or not, you're still going
to exercise that Medigap open enrollment policy period if you decide to start your Medicare
while you're still working. All right. So that brings us to the fifth and final issue.
And that's this: What are your Medicare options while you're still an employee covered by
a group plan? And by the way, this would also mean if you're covered by a spouse's employee
plan, because it doesn’t matter whether you're the employee or your spouse is the
employee, everything that I've just taught and will do on this one still applies. So
what are your options? Number one, you can choose to do nothing. All right? You don't
have to do a thing. Now, remember, as long as you're in a group of 20 or more insureds
in the group, that employer cannot make you do anything.
And if someone says you have to do something, they're absolutely wrong. Now, remember, if
you're in a group of 19 or less and they tell you you must go on Medicare, then that doesn't
apply to you. They have the right to do that. They have the right to say, no, we're going
to pay second as the insured, and Medicare is going to pay first. So 19 or fewer in your
group plan, they can do that. But otherwise, if you're in a large group, you don't have
to do a thing. One option you have is you could enroll in A only. Now up here, we don't
have to do A or B. But here you may make the choice to enroll in A only while you're working.
Which means what? When it comes to a large group, Medicare is going to still pay second
in the hospital side of some of your coverage. That's what A is. Remember A is hospital;
B is medical or outpatient. So A is inpatient; B is outpatient. This means you're just enrolling
in the A of Medicare, the inpatient side, so you can make a choice to do that. Now,
what I want you to realize is this: one group of you that would not want to do this is anyone
who is still working and again, we're in a group of 20 or more, and you're contributing
to a health savings account.
All right? Health savings account. Listen, I didn't say health reimbursement arrangement.
I didn't say a flexible spending account, because what I'm teaching you right now does
not apply to those. Only HSA. And here's the rules. If you enroll in any form of Medicare,
A or B or both, you can no longer make contributions to your HSA. And if you're going to keep working,
that HSA is a tax advantage account that you get to contribute money pre-tax, so that you
can have money for future medical expenses. And so it's wonderful, it's like a health
care IRA. And so you don't have to take A, but if you do take A, no new contributions
to your HSA. You must stop those contributions. So that's one of the consequences of doing
Medicare A only. Now, another option you have while you're still working is to enroll in
A and B. A is going to be free, B remember is the $144.60. And as long as your income
is not above the one hundred seventy-four thousand as a couple or eighty-seven thousand
as a single person, and then you can take A and B and then you stay on the group plan.
Now remember the consequences of this. If the group is large, what's happening? A and
B pays second; your group is going to pay first. And so sometimes that just does not
make financial sense. The second consequence to doing this would be you just started your
B open enrollment period for your Medigap policy, and so you have six months. And so
if you stay on that group plan more than six months in this scenario here, what's going
to happen? Once you get off of that, you're going to have to medically qualify to pick
up a supplemental plan. All right? So I would tell you right now that would not be a good
choice in my opinion. It just would not be. If I didn't like my group plan, and I'm still
working and I have a large group, I would just drop the group plan entirely and go ahead
and go on Medicare A and B and pick up the supplemental plan and just eliminate that.
That would be the normal advice I would give to you if you're in a large group, if you
don't like your large group plan. All right. And remember, if you drop the group, who else
is going to be affected by the decision? Could be the younger spouse or children. We want
to make sure they're not going to be adversely affected by that move. And then lastly, you
can enroll in A and B and then drop the group. And that's what I was just telling you. That
is an option. And for some of you, especially if you're not happy with the coverage at work,
the cost of that, maybe the deductible is high, or maybe the copayments and those things,
you're just very unhappy, then go ahead and drop the group and just take A and B only,
and then you're going to add a supplemental plan to that, and then you'll add a prescription
drug plan to that. OK, and for some of you, that's going to make a lot of sense. And I
would tell you this before you drop that group plan, again, we want to make sure no one else
is hurt by that. But secondly, and then I'll close with this, if you happen to be on real
expensive medications, brand name medications, heart medications, maybe insulin and different
things like that, then you want to think long and hard about this one. I'm going to tell
you why, because normally group plans have better pricing on medications. Medicare is
certainly going to cover prescription drugs. But remember, we have that thing called the
donut hole. And that donut hole means typically you're going to pay more money for your medications
if you get to the donut hole. When you have a group plan, you don't have the donut hole.
So, again, you want to make sure that it's not going to hurt you if you do drop your
group plan because of your cost of medications. All right. So that's what you're going to
do. And I know there's a lot to this question, but all of our Medicare guides are able to
walk you through this whole process. So let us know if we can provide further assistance. Thanks for watching.