Does Medicare make sense for seniors with employer health coverage?
Large Group health insurance premiums are calculated on risk factors:
- Size and the health of the group
- Current utilized prescription benefits
- Average age of the group
- Employer’s claims history
- Type of Occupation
Cost management strategies like those listed below are common approaches, but it’s also important to study the merits of Medicare – either in addition to employer plans or in place of them.
- Workplace wellness program
- Telemedicine
- Economy of scale (PEO)
- *Adopting HDHP / HSA Plans
*Part A comes at a heavy price for HSA participants: Having Part A qualifies as being on Medicare, and Medicare recipients are prevented under IRS rules from making new pre-tax contributions to an HSA. They may use funds already in an HSA account but cannot add new funds.
The rise of high-deductible plans should trigger a serious study by people about the advantages of enrolling in Medicare.
The current monthly premium for Part B of Medicare is $135.50 a month. Part B covers expenses for doctors, care at non-hospital facilities, and durable medical equipment. This works out to be $1,626 a year. There also is a $185 annual deductible that people must pay for Part B expenses before the coverage begins. For people with high-deductible employer plans, laying out $2,000 for Part B premiums and deductibles could well be money well spent.
If you must pay thousands of dollars out of pocket for your prescription drugs prior to reaching your health plan’s annual deductible, you would want to explore getting a Medicare Part D drug plan. Eligibility for Part D enrollment is applicable to applicants with only Part A of Medicare and/or Part B.
There is also a good chance the drug coverage provided by your employer plan may not be considered credible if you are bearing most of the prescription cost. Employers are legally required under Medicare rules to issue annual statements about the credibility of their drug coverage.
It may well be that having employer insurance plus Medicare is not as attractive as simply dropping the employer plan and relying solely on Medicare as your primary insurer. This decision depends on how much your employer subsidizes your health care and on your maximum out-of-pocket expenses in an employer plan. Also, if you drop an employer plan, it might not admit you back in if you change your mind. These possibilities should be explored with your employer’s benefits experts.
Frequently, employees opt into their group health benefits because they simply don’t understand how Medicare “works”.
Our goal is to meet the needs of the community by partnering with Employers and HR Administrators to provide our key Medicare educational seminars and Medicare enrollment services to their turning 65 and 65+ employees. We aim to help you manage your benefits risk by providing viable “options” to your aging workforce with factual, summarized informational courses.
To explore the possibilities of how to save premium and reduce risk without compromising benefits, please contact us to learn more. We are here to help you with Employer Health Coverage.
