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Understanding Medicare Health Plan Rules

As more and more older Americans stay in the workforce, employers may have questions about how employees’ Medicare entitlement impacts their group health plan coverage. Employers sponsoring group health plans that cover individuals enrolled in Medicare should understand the rules below.

Medicare’s coordination of benefits rules, which determine whether the group health plan or Medicare pays first on claims is fairly straightforward. If an employer has 20 or more employees, its group health plan is the primary payer for employees 65 or older. If an employer has 100 or more employees, its group health plan is the primary payer for disabled employees under age 65.

Here is a tip to remember. When an employer’s group health plan is primary to Medicare, the employer cannot terminate an employee’s eligibility for coverage when he or she becomes entitled to Medicare.

Other important rules to remember are the Medicare secondary payer (MSP) rules, which prohibit many employers from taking into account an individual’s Medicare entitlement. Employers must offer employees age 65 or older the same health benefits, under the same conditions, that they offer to other employees; cannot take into account an individual’s Medicare entitlement; and cannot offer incentives to not enroll in the group health plan.

Another important tip to remember is paying an employee’s Medicare premiums is likely prohibited as an incentive not to enroll in a group health plan that would otherwise pay primarily to Medicare. FBN

By Ed Gussio

For more information or to have a free employee benefit consultation, please contact Ed Gussio at Crest Insurance Group.

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