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How Does Medicare Work with an Employer’s Health Insurance Plan?

Copyright © 2014 AARP. All rights reserved.

The greatest source of tension from many people about to qualify for Medicare is how it will fit in with health insurance from current or former employers or how becoming eligible for Medicare will affect that insurance.

These are totally legitimate concerns. And in many cases, just calling the employer’s human resources department or benefits administrator is enough to get questions answered promptly and correctly. But not all such administrators are fully clued in, and there’ve been cases where the information they’ve told folks is plain wrong.

The type of employer insurance you have affects the timing of when to sign up for Medicare, especially Part B. Here, consider what happens to your employer benefits as a result of that decision and what rights you have under the law.

One source of confusion — as always in Medicare — is that the rules affect people in different circumstances in different ways. Assuming that you’re covered by health insurance from an employer for whom you or your spouse is still actively working, here is what you need to know.

Under the rules, which insurance pays first depends on how many people work for your employer.

  • Your employer health plan is usually primary if one of the following is true:

    • You’re 65 or older, and the employer has 20 or more workers.

    • You’re under 65 (with disabilities), and the employer has 100 or more workers.

  • Medicare is usually primary if one of the following is true:

    • You’re 65 or older, and the employer has fewer than 20 workers.

    • You’re under 65 (with disabilities), and the employer has fewer than 100 workers.

“Usually” is used here because some small employers team up with other small employers to form a larger group that offers health insurance to all their employees. This arrangement may affect the “20 or more” or “100 or more” rule that determines whether Medicare is primary or secondary.

If you’re in doubt, ask your employer or call the Medicare Coordination of Benefits Contractor.

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