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Employer Medicare Coverage

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As people get older, they need health coverage more than ever. Many employers, especially larger employers, elect to allow retirees to stay on the health plan offered to working employees. Other companies may choose not to cover retirees because of its lack of cost efficiency. This is where Medicare comes in.

Medicare is a federal program that provides health care coverage for those ages 65 or older. It also covers those under 65 with certain disabilities or end-stage renal failure. There are several different insurances offered through Medicare that cover certain basics.

What are the Different Parts of Medicare?

Medicare is composed of several different parts, or insurance.

  • Part A is hospital insurance and covers any inpatient care a Medicare-recipient may need. It also covers skilled nursing facilities and hospices.
  • Part B is the actual medical insurance. This covers any preventive or medically necessary services such as doctor’s appointments, physical exams and other outpatient care and services.
  • Part C is actually a Medicare Advantage Plan. This is a plan that offers Parts A and B, sometimes along with Part D, through a private health insurer.
  • Part D is the newest Medicare coverage. It provides prescription drug coverage to the elderly.

Which Parts are Applicable to Potential Medicare Recipients?

Companies offering health coverage to retirees would cover Parts A and B, and usually Part D. Since not all companies offer the drug coverage, those who elect group coverage can also sign up for Medicare Part D on their own.

Individuals opting out of group coverage or who are not offered this coverage can sign up for Medicare Parts A and B. Those who do not sign up for Parts A, B and D can face penalties equivalent to 1% of each year’s national average monthly premium multiplied by every month the individual does not have coverage, once they choose this coverage.

Part C is another option. This is health insurance coverage that offers Part A hospitalization and Part B medical insurance to beneficiaries. Many private health insurers also include Part D drug coverage. It’s worth looking at individual plans in the area to see what coverage is offered.

Choosing Employer Coverage Over Medicare

It’s usually advisable for a Medicare recipient to sign up for the company’s retiree plan, if one exists. By joining a Medicare HMO or PPO, they may limit or end their coverage through their employer. Companies with a retiree plan should contact their plan to see what, if any, stipulations exist should a retiree opt out of employer group coverage.

Any employer with 20 or more employees that offers a group health plans provided through employers must offer the same type of coverage and services offered to current workers and their families. Any group health plan that does not offer the same type of benefits and coverage to retirees can be reported to the State Insurance Department.

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