A blog about Medicare. What you and your employees need to know
What’s Size Got to Do with It?
Author: Lora Drummond
Medicare Transition Specialist
What’s Size Got to Do With It?
To defer or not to defer…that is the question.
If you are an employer of 10 or 1000 employees, be mindful of guiding your aging workforce about Medicare. While it is ok to defer Medicare enrollment when on an employer group plan, the size of your workforce creates a few caveats.
SIZE: Employers with 20 or fewer employees should be versed in basic Medicare information to guide employees to enroll when they are turning 65*. Employees can continue their employer plan and coordinate it with Medicare if it makes sense to carry both, but enrollment will be essential when they are eligible and cannot be deferred without a penalty when enrolling later.
CREDITABLE: The second consideration for staying on a group plan when eligible for Medicare, is whether the group plan is creditable. That means the group coverage should be as good as Medicare. If employees are age 65 or older, they should validate whether their employer’s coverage is creditable before they elect deferring enrollment. Annually, commercial carriers will provide employers with a “notice of creditable coverage” for each plan offered. If a plan is deemed not creditable, then an employee will need to enroll in Medicare when they are eligible.
Large employers with creditable coverage should still initiate Medicare conversations. Factors such as overall medical health, chronic conditions, and group plan costs sometimes make it sensible for employees to transition to Medicare while still working. HR teams provide a benefit enhancement to their employees when Medicare is a clear and compliant offering in the benefits package. Guidance through the Medicare process is also a benefit enhancement.
If an employee enrolls in Medicare and continues on their group plan, there is one last consideration. This reminder applies when an employee is contributing to a Health Savings Account (HSA). As soon as an employee enrolls in Medicare they can no longer contribute to their HSA.
Many employees forget to stop HSA contributions which can later be subject to IRS taxes and possibly penalties. The funds in the HSA are still qualified to use for medical expenses as intended and also towards some Medicare premiums and copays. Contributions made into the fund just cannot continue. When turning 65 while working for a large employer and deferring Medicare, we recommend suspending HSA contributions 6 months before retiring.
Consulting with a Certified Medicare Planner® should be part of an employee’s retirement plan no matter what size company they are employed with or retiring from.
We have developed a simple tool you can use to help employees compare Medicare and group plan costs. The STAY or GO ANALYSIS™ takes a few pieces of information and can tell you if it makes cost sense to transition. There are other factors for determining if Medicare is appropriate for each individual, but the cost is usually the first place to start. https://themedicarearchitect.com/hrresources/
Partnering with Certified Medicare Planner® to help your employees makes good sense. There is no cost for the services but the guidance can be invaluable.
- Education so they understand Medicare
- Non-Bias carrier-agnostic plan guidance so they see all their options in their area
- Easy plan comparison support to match their individual needs
- Advocacy and ongoing support
Partner with Medicare experts who will provide the same level of confident support YOU provided them as active employees and when they make an exit plan.
Give your employees personal guidance from a team of experts that will follow them after they retire.
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*www.medicare.gov resource source
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