[12-52 Reasons]  Clarity- Who Pays First?

Spring brings up thoughts of baseball and spring training here in Arizona. There is a famous old baseball sketch between two comedians where one tries to identify the players on a baseball team for the other. “Who’s on first? What’s on second?” he says, referencing players by unique nicknames, completely confusing his friend. This banter perpetuates a humorous cycle of confusion between the pair. 

When it comes to Medicare, you can avoid the comedy sketch of confusion by having a trusted team of Medicare transition experts to help guide your employees with accurate answers.

When your employees turn 65, they will likely begin inquiries about Medicare. Some employees might be considering Medicare or be concerned that they need to enroll in Medicare when eligible or be subject to penalties for deferring enrollment. They don’t know if they can continue their group plan or even keep both. How will you find the appropriate answer to these types of questions for your employees?

Who needs to enroll while still working?

Let’s start with who needs to enroll when they become eligible. Employers need to help define IF their employees need to enroll in Medicare and whether their current healthcare benefits are creditable. The ‘Number of Employees’ criteria can help begin this discussion for your employee’s decision: 

• Employers with under 20 employees on a group plan should prepare employees to transition to Medicare when eligible. Don’t defer Medicare enrollment when eligible. 
• Employers with more than 20 employees on a group plan can provide support for Medicare questions. Employees are not required to enroll in any part of Medicare as long as they are active employees and covered by a creditable healthcare plan. Employees can defer Medicare enrollment in most situations until leaving their employer.

Keep the employer’s plan and enroll in Medicare too?

In either case above, an employee can keep their employer plan AND enroll in Medicare as long as the employer plan permits the dual coverage. 

But why have both plans? Is your employee contributing to a high deductible HSA, which might create problems with Medicare later? Are there union or employer plan rules that you need to consider?

The apparent reason for having both plans is for getting more coverage. Part A is free for most, so why not take the additional coverage? 

In our experience, generally, a client who kept their employer’s creditable plan and enrolled in Medicare did so out of confusion in being required to enroll in Medicare when eligible to avoid penalties later. Consultation with a Medicare expert can help eliminate errors, risk, and worry. We can explain their options and compare costs so they can make confident decisions and are not paying for additional coverage they don’t need. 

So… who pays first?

Employees should consult with a Certified Medicare Planner® before making a dual coverage decision. We want to make sure the decision benefits them. But if they elect dual coverage without guidance, you may be curious about how claims will coordinate for payment if an employee comes to you with claim questions later.

Is Medicare the first payer or the second?

• If you are an employer with fewer than 20 employees, the employee will need to enroll in Medicare and stop HSA contributions. Their employer plan will be considered secondary. Medicare will be the primary payer. 
• If you are an employer with 20 or more employees, the decision to enroll additionally in Medicare is an individual’s decision while they’re still working. Medicare enrollment is not required if they are still working and on a creditable plan.  If the employee chooses to have both coverages,  the employer-sponsored health care coverage pays primary to Medicare.

How does Medicare know who pays first?

With group insurance as primary, the employee group enrollment forms will provide this information. The group plan will indicate that it is primary to Medicare on the employee’s file with the group health administrator. Medicare does not get involved here. All they do is pay what they are told, and reject what they don’t approve of.

If Medicare is primary, the secondary information will need to be provided on the claim form at the medical provider’s office. Medicare will send the secondary claims automatically if the secondary insurance information is on the claim.

If Medicare feels a bit confusing, we get it! 

That’s why we are here to help make Medicare@Work easier! An employee can find greater confidence about when to enroll in Medicare by consulting with a Medicare expert like a Certified Medicare Planner®. …And whether they should wait and keep their employer group plan also. Every situation is different.

To help you guide your employees to a Medicare homerun – we are here to help!

Medicare guidance for your employees in 2021.

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Your Medicare Transition Partner
– Lora