Group health plans and Medicare

November 29, 2016

If you are retired and are enrolled with Medicare and a group health plan, Medicare is the first coverage you get, followed by the group health plan.  The group health plan, in general, is a health plan offered by an employer or employee organization that provides health coverage to employees and their families.

Group health plans have different rules and conditions depending upon the state, the employee organization, and your role in the organization. All plans do not work the same way, and they may also differ vastly from the way Medicare plans work.  Hence, there are several things you need to be aware of.

Consider the following questions if you are enrolled in a group health plan, and nearing retirement:

Will your employer cover you after you retire?

Group health plans are controlled by the employer/employee organization, and they can change benefits or premiums, or even cancel coverage.  So make sure you are aware of the continuity of the plan and its benefits after retirement.

What are the benefits and the costs?

Your employer may offer coverage for you and/or your spouse, so inquire as to who is covered with what benefits.  There may be a limit to how much coverage will be provided. The plan may just allow “stop loss” coverage, which starts covering your out-of-pocket costs only when they reach a certain amount.

What will happen to this coverage when you become eligible for Medicare?

At retirement, if you have paid Medicare taxes for at least 10 years, you will become eligible for Medicare.  In most situations you will have to enroll with Medicare Part A and B to get full retiree coverage.

What will be the effect of continued retiree coverage on your health coverage and your spouse’s health coverage?

You must find out how your retiree coverage will work with Medicare.  If your employer wishes to continue coverage even after you become eligible for Medicare, make sure you know who is covered and what is covered.  Get a copy of your plan’s benefit booklet, or contact administration to find out details.  You may also want to talk to your State Health Insurance Assistance Program for advice.

What if the employer who is providing coverage goes bankrupt?

If this is the case, Federal COBRA regulations may protect you.  If any other company within the same corporate organization still offers a group health plan to its employees, you may be eligible for COBRA continuation coverage.  If this is not suitable, you may be eligible to enroll in a Medigap policy during the special enrollment period, i.e. other than the open enrollment period when Medigap policies are open for enrollment.

Group health plans may or may not be advantageous for beneficiaries.  They may offer coverage in addition to Original Medicare, in which case, it is wise to stay enrolled in them.  In other cases, they may not be suitable to your health needs, and you may want to leave them after retirement and enroll in a Medicare Plan.  Either way, it is important to be conscious of your options.

This is not a complete description of Medicare or group health plans.  For more information and to speak with a Medicare specialist, contact Medigap, Inc. at 1-855-214-4404.


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