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3 Ways Having an Employer Health Plan Affects Medicare

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Having primary insurance from a current employer can affect you as a Medicare beneficiary in several ways. Here’s a quick list:

  • You (and your spouse) can delay signing up for Part B, and therefore avoid paying Part B premiums, until the employment or health coverage comes to an end — without risking late penalties if you follow the rules.

  • You (and your spouse) can delay signing up for Part D prescription drug coverage without risking late penalties, provided that your employer drug coverage is considered creditable (meaning it’s at least of equal value to Part D).

  • If your employer coverage includes a pre-tax Health Savings Account, you should consider delaying enrollment in Part A, as well as Part B and Part D, because under IRS rules you can’t (as an employee) continue to contribute to an HSA if you’re enrolled in any part of Medicare.

You always have the right to drop your employer insurance entirely and rely on Medicare alone. But keep in mind that you probably won’t be able to get your employer coverage back if you change your mind. So before taking any action, consider Medicare’s costs and benefits compared to those you have now.

Be aware that if you drop your plan, your employer can’t — by law — provide any benefits that supplement your Medicare coverage. Otherwise, the employer may run the risk of prosecution and large fines for violating the law. In fact, your employer will probably ask you to sign a statement saying that your decision to make Medicare your primary insurance is voluntary.

So if you wanted supplemental coverage, you’d have to pay for Medigap insurance out of your own pocket. Also, if you’re married and your spouse is covered by your employer plan, he or she would almost certainly lose coverage if you dropped out of the plan.

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