by Margaret Stedt, LPRT, C.S.A.
Too many agents and brokers who specialize in the group and individual markets are not educating themselves and their clients about Medicare eligibility. This may create coverage delays and lifetime penalties for the Medicare beneficiaries when they leave the group or individual coverage or enroll in COBRA.
Medicare is the nation’s largest health insurance program covering over 47 million Americans. Medicare is administered by the Centers for Medicare & Medicaid Services (CMS). Part A and Part B are called Original Medicare. Part A is considered coverage for facilities and Part B is medical coverage.
Agents and brokers should access the ‘Medicare and You’ 2014 booklet found on the www.medicare.gov website. Read section two very carefully. You need to especially note the pages that address who pays first. It varies by the size of group and the type of coverage. You should also read the Medicare pamphlet, “Who Pays First.”
For groups with fewer than 20 employees (counting noses), Medicare is the primary payer and the group plan is the secondary payer. Medicare eligible employees and their Medicare eligible dependents should enroll in both Part A and B (also called Original Medicare). With most group plans they may continue on the group plan.
For groups with more than 20 employees, the group insurance plan is the primary payer and Medicare is the secondary payer. As long as the employee and/or the dependent is employed, in most cases, they do not need to enroll in Part B of Medicare, except a retired or non-employed spouse.
Regardless of the size of the employer group, it is important to note that, if the dependent spouse is retired or not employed (a non-working spouse), the dependent should enroll in Medicare Part B as soon as they are eligible at age 65 or when they retire although they will be going on their working spouse’s group plan. Not doing so could result in a delay of enrollment into Part B and delayed coverage, plus a 10% penalty for each full year the Medicare eligible person delays enrollment in Part B of Medicare. And, if they did not have creditable Part D coverage, they could be subject to the Part D penalty (1% per month for each month they did not have creditable prescription coverage). They are delayed to the general enrollment period from January 1 to March 31 each year. Part B coverage then begins July 1 of that year.
This situation is coming up more and more in our Medicare educational meetings. Recently I met with a retiring employee whose non-working spouse was facing a 40% penalty for four years of not having Part B coverage; plus she faces a delay in coverage to the general enrollment period due to misinformation from the employer and their broker.
Employees and/or their dependents (or disabled family member) may sign up for Part A and/or B:
• When first eligible (turning age 65).
• Anytime they are still covered under the employer plan, or
• During the eight-month period that begins the month after employment ends or the coverage ends, whichever happens first. Usually there is no late enrollment penalty if the Medicare eligible person signs up during these times:
• Their initial enrollment period (three months before their birthday, the month of their birthday, or three months after their birthday
• Or during a special enrollment period (for example loss of employer coverage is one.)
Note: The special enrollment period does not apply to people with end stage renal disease. Always have the individual contact Medicare at 800-Medicare for more details or individual specific situations.
COBRA coverage and retiree health plans are not considered group insurance coverage. These individuals will not be offered a special enrollment period into Medicare Part A and/or B and may be subject to delayed enrollment to the general enrollment period. When the former employee and/or dependent who is 65 or older elects to go on a COBRA plan, it is very important to enroll in the Part A and B of Medicare within eight months of losing their group coverage. Also, if they are turning 65 while on COBRA, they should also enroll in Part A and B of Medicare. Employees/dependents who are on Medicare and become eligible for Medicare must be allowed to enroll in Medicare Coverage. (Many individual plans are also not considered creditable coverage after age 65.)
Most employers do not understand these Medicare requirements and may be misadvising individuals at the time of COBRA notification. Note, if the individual is on COBRA and their coverage runs out, if they have Part A and B of Medicare, typically the Medicare supplement plans allow for guarantee issue only at the end of COBRA coverage. (Unless they are newly covered under Part B, which is a guarantee issue situation.)
It is especially important for groups of 20 or more to make sure that neither the employer nor you, in any way, influences or forces Medicare eligibles to leave their group insurance plans. Medicare informational meetings must be available to all employees (over and under age 65). If employers want to contribute toward their employees and/or employees’ Part B coverage or senior insurance plans it is important that they contribute the same amount for all employees/dependents. There must be no discrimination regardless of age. Always make sure they discuss this with their CPA and tax advisors.
As the group or individual agent/broker, you need to be aware of these important Medicare Part B eligibility and coverages or it can result in misinformation and some serious lifetime penalties for the Medicare eligible individual whose coverage was delayed. You have many resources available to you to help you provide the best service for your clients: Access the Medicare website; work with a Medicare trained and certified agent; contact the employer plan’s group departments and Medicare plan departments. Also, join the National Association of Health Underwriters (NAHU), which keeps members informed everyday of changes, issues and pending legislation. NAHU also provides training and broker-tobroker resources. It is up to you to be the best informed agent to service your clients about Medicare eligibility!
Margaret Stedt, LPRT and CSA is owner of Stedt Insurance Services, which was established in 2003. She is president elect of the Orange County Association of Health Underwriters and specializes in Medicare supplement plans including Medicare supplements, Medicare Advantage and stand-alone D plans.