Transitioning from Employer Coverage to Medicare

If you were getting ready to retire, where would you go to make the switch from your employer’s coverage to Medicare? Unfortunately, a simple trip to Human Resources may not give you all the answers you need.   

The switch over to Medicare can be complicated. If there are any mistakes made in the required paperwork, coverage gaps and even premium penalties could follow. While Human Resources professionals should be trained to assist workers’ transitions to Medicare, they do not always offer employees the right answers to their questions.

According to the Medicare Rights Center (MRC), an advocacy and consumer education group, a surprising number of employers offer their employees inaccurate support. In fact, misinformation provided by a worker’s employer is one of the main reasons that those eligible for Medicare call the Medicare Rights Center help line. While employers are very familiar with their own health benefits packages, they do not know much about Medicare.

Misinformation is not the only issue facing those ready to retire and enroll in Medicare. A recent report released by the MRC showed that more applicants face denial of coverage than any other problem.

Approximately 33 percent of all calls to their help line deal with denial of coverage (followed by transition issues at 23 percent and low-income seniors facing problems on how to pay for Medicare at 21 percent).

Many of the issues behind that 23 percent of transition issues can be avoided if the applicant signs up before the initial enrolment deadline. Individuals must sign up for Medicare within the seven months before or after their 65th birthdays unless they have coverage elsewhere.

Employer health coverage remains the primary provider if an individual is 65 and still actively working at a company with more than 20 employees. If a company has fewer than 20 people on staff, Medicare is obligated to offer primary coverage when an individual turns 65.

Failure to sign up within the allotted timeframe results in a penalty of at least 10 percent on Part B for each 12-month period the person had coverage but did not enroll. There are also penalties for Part D and Medicare Advantage (Part C).

Regardless of primary status, every person should make sure to enroll in Part A. There is no premium charge. Parts B and/or Part D may come later, depending on what an employer is offering.

Be aware that if an individual has a health savings account, he or she cannot make contributions to it if enrolled in Medicare.

To avoid pitfalls, make sure to start early and research the transition to Medicare from an employer’s coverage in detail.

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