#7 Solution- Change – Spouses and Medicare Transition

Hope you had a sweet Valentine’s Day!  Tying this blog to the holiday makes me think of hearts, flowers, candy…oh, and…spouses… and of course, Medicare. Medicare options are as varied as the choices in a box of chocolates! Before you choose a candy, you mentally weigh the pros and cons of the offerings in the box. I weigh-in for the nut-filled ones! How about you? If you have a nut allergy, you probably stay clear of making that choice.

There are pros and cons to weigh before deciding to transition to Medicare too. Costs are a factor but spouse and dependent coverage under the employee’s plan will affect a Medicare decision too. Sometimes the math makes transition sense for the employee, but continuing group coverage to benefit family members might change a decision. 

Let’s look at a few scenarios based on two common questions from our workshop attendees:

• If I am eligible but my wife is not. Do I leave my group plan?
• If I am on my husband’s insurance- if he retires what happens to me?

Medicare was designed for individuals 65 and over. Unlike the employer plan, an employee’s spouse and children can not follow them to Medicare unless they are also age 65. When an employee leaves their group plan, the spouse and dependents will lose their coverage too. So what do they do?

A Certified Medicare Planner® (CMP) can help with these planning discussions to avoid costly mistakes. A CMP is experienced in knowing the planning questions to ask, can help compare costs in different scenarios, help the employee create a timeline for transition, or explain other family members’ coverage options if needed.

Employer Plan to Medicare Considerations

Does the employee have to transition to Medicare at age 65?

• If the employer has fewer than 20 employees and their Medical plan is not creditable, the employee will need to transition to Medicare when eligible. Options for the spouse?
• If the spouse has a different employer plan, they could both move to the other employer plan as long as the employer’s plan meets the creditability requirements for the spouse turning 65 and deferring Medicare. 
•  If the spouse is not working, then COBRA is an option for the spouse losing coverage due to the employee moving to Medicare.

What about when retiring/leaving an employer?

• Suppose the employee is 65 and retiring, and the employer offers no retiree medical plan. In that case, the employee may consider postponing retirement until the spouse is old enough to transition to Medicare. That way their coverage also continues.
• The retiring employee might have the option of coverage on the spouse’s creditable group plan, would move there for coverage and defer Medicare.
• Note-COBRA is only an option for someone who is not Medicare-eligible. 

What if your spouse is not employed when you plan to retire?

• If a spouse/dependents will lose coverage from a group plan due to an employee’s retirement or enrollment on Medicare, they are eligible for COBRA for a period of time. After the COBRA period, they would need to find alternate healthcare coverage. Certified Medicare Planners® can help with these discussions also. 

Suppose you have done the “Stay or Go Analysis” and the group plan’s costs are better than Medicare and creditable. In that case, the employee can defer retirement to keep his family coverage, if this is the better option.

To support these discussions, have your employee partner with a Certified Medicare Planner® early in the process. CMP’s want to help employees avoid costly mistakes and provide confident considerations for family members who might be impacted by the decision too. 

Medicare guidance for your employees in 2021.

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Your Medicare Transition Partner
– Lora