Many public sector employees are postponing retirement and working well beyond the traditional age of retirement (65). Even with the great resources available through the Arizona State Retirement System (ASRS), the influx of information can be overwhelming for your employees as they approach retirement age and Medicare eligibility. As a result, they could be passing up a comprehensive health insurance plan that’s a better fit for their needs and the needs of your organization.
The greater your education and communication efforts are on the topic of Medicare, the higher likelihood your employees will understand their coverage options and select the most appropriate plan. So, how can you as an employer or HR professional help educate your 65+ employees on the intricacies and benefits of Medicare? Let’s start by reviewing a few basics about Medicare.
What is Medicare?
Medicare is a federal health insurance program for eligible U.S. citizens and legal residents, that’s funded in part by the taxes you pay while working. There is no group or family coverage, Medicare is individual health insurance that you become eligible for once you meet any one of the requirements.
When Are You Eligible for Medicare?
If you or your spouse have contributed payroll taxes to Medicare throughout your working life, you are eligible for Medicare when you reach age 65 – regardless of your income or health status. You must also be a U.S. citizen or legal resident who has lived in the United States for at least 5 consecutive years.
You could be Medicare-eligible at any age with a qualifying disability or end-stage diagnosis of ALS or renal disease.
What Does Medicare Cover?
Medicare has different parts that help cover specific services.
- Medicare Part A (inpatient)
- Medicare Part B (outpatient)
- Medicare Part C (Medicare Advantage plans)
- Medicare Part D (prescription drug coverage)
Original Medicare is the combination of Part A and B. Medicare Part A helps cover inpatient hospital stays and skilled nursing care. Medicare Part B helps cover doctor visits and outpatient care.
There are options for additional coverage with Medicare Part C and D but we’ll stick to the basics today. For more information about Medicare Part C and D, check out this Medicare 101 printable resource.
What Is Not Covered By Original Medicare?
There are out-of-pocket costs associated with Original Medicare and there is no limit to the percentage you may be expected to pay. Original Medicare doesn’t cover prescription drug costs, or routine dental, vision, or hearing care. That’s where supplemental coverage with Medicare Part C (Advantage plans) and D (prescription drugs) comes in.
How Much Does Medicare Cost?
Medicare Part A out-of-pocket costs typically fall within the same categories as your traditional health insurance minus the premium. There is no premium, or fixed monthly amount, for Medicare Part A, but there is a deductible, copays, and coinsurance.
For Medicare Part B, the biggest difference is the premium associated. In 2022, most insureds pay around $170 per month for Part B but it may be further adjusted based on an employee’s income. For a more detailed breakdown of Medicare in Arizona, refer to the ASRS 2022 Medicare Plans video presentation.
Is Medicare Enrollment Automatic?
Enrollment in Medicare is not automatic. The Initial Enrollment Period (IEP) is 7 months long, and it includes your 65th birthday month plus the 3 months before and the 3 months after.
When Should Employees Enroll in Medicare?
Employees opting for Medicare should enroll three months prior to turning 65 so that coverage will be effective beginning the first day of the month they turn 65 or retire after age 65. If employees don’t enroll during their Initial Enrollment Period, they’ll likely have to wait to enroll during Medicare Open Enrollment, which is October 15-December. They may also face higher premiums.
What Should Working Employees Do When They Turn 65?
Once your employees are educated on Medicare and understand their rights and options, they should compare and contrast the benefits of Medicare to their current group health insurance plan. Cost is always the first thing that comes to mind, but here’s a list of all the areas to consider when helping your employees make an educated decision about enrolling in or delaying Medicare.
- Employer contributions vs. Medicare premiums
- Employer plan deductible and coinsurance
- Maximum out-of-pocket
- On-going care or treatment
- Chronic conditions
- Prescription drug use and coverage
- Network hospital and doctor preferences
If your employee chooses to enroll in Medicare, we advise connecting them with a Medicare advocate and expert that can provide personalized advice and help ensure they get enrolled on time and in the right coverage to suit their needs and budget.
If your employee still chooses to stay on their or their spouse’s group health insurance plan they’re essentially choosing to “delay enrolling in Part B.” If they want Medicare benefits later on in retirement, they’ll still have to take action and return their enrollment card before the effective date of Medicare coverage.
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