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Delaying Medicare Enrollment

By Andrew Johnson and Justin Fundalinski, MBA | November 21, 2016


Recently, we had a few questions come in regarding delayed Medicare Part B enrollment. Because Medicare can be a complex topic and these questions are common, we wanted to share some of the concerns these folks had with you. What happens if you delay your enrollment into Part B of Medicare because you are still working and covered by your current employer’s health plan?

These are some of the things folks were wondering.

Special Enrollment Period

I delayed enrolling because of current employer coverage. Will I face a penalty for late enrollment when I stop working and enroll?

Functionally no. If you or a spouse are currently working and you receive your health care benefits through that employer group plan, you are eligible for a “Special Enrollment Period” (SEP) while you are working  as well as an additional 8 months following the end of that coverage. This is not the case if you are relying on retiree benefits or COBRA benefits that you or a spouse earned while working but have since retired or left your job (“currently working” are the keywords).

During your SEP you can enroll into Medicare and are eligible for “Premium Surcharge Relief.”   This means that enrolling during the SEP will offset your Part A and Part B late enrollment penalty by as many months as you were eligible but covered under a group plan of a current employer of any size. Essentially, you can enroll without penalty as long as there was no lapse of coverage while you were working.

Small Employer

We want to note that the employer can be of any size.  There are differences in how Medicare interacts with employer group plans for employers of different sizes.  Unfortunately, there is a lot of ambiguous, conflicting, and confusing information out there regarding the eligibility for an SEP if you are covered by a small employer group plan that pays secondary to Medicare.  Having a small employer (less than 20 employees) plan does not preclude one from an SEP and the protections it provides from Medicare’s late enrollment penalty, but is does throw a substantial wrench into things.

Read the Fine Print

Does that mean that I can delay my enrollment while working without worry?

No, it means only that the late enrollment penalties, which can increase your monthly premiums for life, will not impact you if you were covered by a current employer’s group plan.

What can be much worse than a 10% premium penalty is your employer sponsored insurance denying claims because you didn’t read the fine print.  Small group employers (20 or less) often require that you sign up for Medicare when eligible.  This is because small employer plans often become the secondary payer to Medicare for insurance claims and they are certainly not going to step in as the primary payer because you decided not sign up for Medicare. This creates a situation where you believe you are covered for health care because you are paying premiums on the same policy you have had your entire working career, but functionally you may as well not have any insurance.

Required to Enroll?

I work for a small employer and delayed my Medicare enrollment. What should I do?

It is very important that you check with the current employer plan to see if it requires you to enroll in Medicare in conjunction with the group health plan in order for the group plan to pay on claims.  If they do require you to enroll in Medicare then your best plan is to take advantage of your Special Enrollment Period for Medicare and enroll now!  Fortunately, you will not be subject to premium penalties because you are in an SEP. Remember though that you are essentially not insured until your Medicare kicks on.  If it is not a requirement, we suggest you request the section of your insurance contract that clearly states the exemption from becoming secondary payer, record your conversation with the representative you speak with, and enroll in Medicare anyway, just to hedge your bets.

What About Medicare Supplements?

Do I need to enroll in Medicare Supplements while I have my employer coverage?

Generally the way Medicare Supplement enrollment works is when you first enroll in Part B you receive a six month window for guaranteed enrollment into Medicare Supplemental Insurance.  After that, your guaranteed issue right (which means an insurance company can’t refuse to sell you a Medigap policy) no longer exists unless you fall into a limited set of situations. Fortunately, one of the situations is that you have Original Medicare (Parts A and B) and your employer group plan that pays after Medicare (small group plans) is ending. You have 63 days after the date your coverage ends (limited exceptions apply) to enroll in a Supplemental policy.   So if you sign up for Medicare under your SEP and then later lose your small group coverage due to retiring, you have a guaranteed issue right to obtain a Supplemental policy.

You might not have substantial changes in your working or home life from when you were 64 years old, but turning 65 can have invisible impacts on your health care coverage. Make sure to check any coverage you are relying on to make sure you know how Medicare eligibility can affect it. If you have a unique situation or questions that require clarification beyond these generalities, our office is here to help people make sense of situations like these, which many face heading into retirement.

Medicare Part D Plans: Moving the Goal Line

By Andrew Johnson and Justin Fundalinski, MBA | October 20, 2016

Medicare Part D

With autumn upon us it is rather easy to see and feel the changes of a new season: the air gets crisper, the days get shorter, leaves change colors and baseball gives way to football. Unfortunately, Medicare Prescription Part D Plans are subject to change soon too.

Some Medicare changes we can set the clock to, such as the annual reset for deductibles and the coverage gap known as the “doughnut hole”. However other changes, such as changes in what prescription drugs are covered, are not as obvious as the start of Monday Night Football. When it comes to prescription drug coverage, Medicare may move the goal line on you by not continuing to cover some of your medications. This month, we’d like to look at some reasons why you may need to review your Prescription Part D Plan playbook and discuss some basic steps to avoid overpaying for your prescriptions.

Changes within your personal situation:

Reviewing your Prescription Drug/Part D Plan (PDP) can be particularly important if, in the last year:

  • You had a change in your prescription drug use.
  • You moved or changed your primary legal residence.
  • Your carrier altered or discontinued your plan from the previous year.
  • You were unhappy with paying more than you may have had to for the prescriptions you use.

Changes within your prescription plan:

Even if your personal situation has not changed, the formulary (the drugs covered by your prescription drug plan) can change right out from under you.  To make things more complex (because it is so simple already), depending on when the prescription drug plan changes, the drug plan provider can notify you in different ways.

  • If changes are made during your coverage year, the insurance company is required to identify specific drug changes that impact you personally. They give you a 60-day notice that the changes are happening and you will typically be able get a 30 day supply of your current prescription drugs within 60 days of the change taking place to help you transition over to different prescriptions covered under the new formulary. It’s nice that the insurance provider lets you know of the changes so you can make prescription changes… too bad it does not allow for special enrollment period so you can shop around for a new plan.
  • If the changes are made on the upcoming year of coverage (when your plan renews for an additional year) you can throw out those courtesies of the insurer letting you know that changes will impact you personally. Yes, you will receive an Annual Notice of Change (ANOC) letter in September, but this letter will not outline if a drug you are currently using is removed, re-tiered to be more costly, or has an increase to its copay. It is up to you to review that the coverage of the drugs you will use has not changed for the coming year, and unless you read/analyze your ANOC carefully each year, you may experience some negative impacts.

The best ways to avoid overpaying:

Since the plans offered and the drugs covered change from year to year along with your health and personal situation, reviewing your plan each year can save you money.  Avoid making a costly mistake by following these simple tips:

  • Don’t assume that you are already in the best available plan for your needs.
  • Compile a comprehensive list of your prescriptions; their dosage, as well as how often and where you fill them.
  • Visit Medicare.gov to compare different plans that are available to you. You can use the “Find Health & Drug Plans” tab on their website and search using your zip code to find plans and local or mail-order pharmacies.
  • Don’t focus on premium alone. Deductibles and increased copays on your select drugs can outpace the monthly savings on premium.

There are typically a few dozen plans available and based on your prescription needs you may be overpaying for the same drugs bought from the same pharmacy solely because of the plan you selected.  Every year the plans get the chance to move the goal line on you, and you have between Oct 15th and Dec 7th to check your playbook and confirm that you are still in the best plan that meets your needs prior to getting locked into it for another year. If you feel like Medicare moved the goal line for you and want some help with your playbook, please feel free to reach out to the office and schedule a time to meet with Andrew.