Tuesday, February 22, 2022

Medicare and Employers with Less than 20 Employees/COBRA Pit-Fall

When employees reach age 65 they have decisions to make regarding Medicare.  These decisions could have serious consequences.

Employers with less than 20 employees

Employees participating in the company health insurance MUST enroll in Medicare Part B when turning 65. In groups with less than 20 employees the government considers Medicare the employee’s primary insurance and the employer provided insurance as secondary coverage.

The employer can subsidize the cost of an employee’s Medicare Part B and Medicare subsidy. This has typically proven to be less expensive than the insurance companies individual group health rate.

How can COBRA trip up Medicare enrollment?

Employees older than age 65 who deferred Medicare enrollment typically receive an eight-month special enrollment period, starting the month after employment ends or their group health insurance ends, whichever happens first. Employees should beware that if after ending employment they elect to use COBRA for their insurance for more than eight months (and COBRA coverage is generally available for up to 18 months), then the penalties for missing the special enrollment period and enrolling late are significant and, in the form of higher premiums, continuous.