Should you keep your
employer coverage or take Medicare? Perhaps both
by Phil Moeller | May 17, 2019
For many Americans,
working past 65 is a must in order to put away enough to retire. But when your
Medicare open enrollment date overlaps with your employment, and you have other
healthcare coverage options, which should you choose?
In this week’s
column, Phil Moeller, the author of Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your
Costs and co-author of the updated edition of How to Get What’s Yours: The Revised
Secrets to Maxing Out Your Social Security, offers advice on
this topic.
Got a question of
your own about Medicare or
Social Security?
Send it to askphil@considerable.com.
Should I keep my
group plan and enroll in Medicare?
Earl: I will turn 65 soon.
I currently have a private insurance plan with my wife. We’ve had this plan
more than 20 years. It is very, very costly but even though I will be eligible
for Medicare, we can’t just give up this policy, because my wife is eight years
younger than me and so she will be too young to qualify for Medicare for a long
time.
I also have the
option to have coverage under my company’s group plan at work which offers
either a PPO (preferred provider organization) or an HMO (health maintenance
organization) in which the company pays 70%. We are a small company with less
than 20 people, and I own the company.
I am not retiring
until maybe 75, if ever!
If I receive
Medicare, I will be paying what I regard as the discriminatory higher premium
level falling under Medicare’s high-income surcharge.
It’s my understanding
that I cannot stay with my private coverage if I enroll in Medicare.
Having said all of
this, and with apologies for droning on a bit, if you were me, which coverage
would you go with if cost was not a consideration? Medicare A and B with a
Part D drug plan and a comprehensive Medigap plan? Or should I just have
premium-free Part A of Medicare and keep my group plan?
Whatever I decide, do
I always still need to sign up for Medicare A?
One last thing: I
don’t take any prescriptions and rarely go to any doctor except annual
physicals. I also am a non-smoker and in good physical shape.
Phil Moeller: If I sat down and
tried to invent a scenario that illustrated how complicated health-insurance
decisions can be, it might look a lot like Earl’s question!
Earl asked what I
would do if money was no object. That’s easy. I’d keep the most comprehensive
private plan for me and my wife, I’d get the most complete Medicare package
that Earl described.
Lots of people have
both and, with the rise in high-deductible employer plans, it can make sense to
do so.
His concern that he
cannot keep private coverage along with Medicare is unfounded.
Lots of people have
both and, with the rise in high-deductible employer plans, it can make sense to
do so.
The key here is to
understand which policy pays first, which is secondary, and whether there are
still unpaid expenses after both policies have paid. Such “coordination of
benefit” questions used to be of concern mostly to insurance actuaries but have
become important consumer issues in recent years.
Under Medicare’s
rules, small employers such as Earl’s company are permitted to require their
employees to get Medicare when they turn 65. At that time, Medicare becomes the
primary insurer and the workplace plan provides secondary coverage.
As the owner of the
company, however, Earl is certainly free to continue providing employer
coverage to all employees who are 65 or older, and then letting them decide
whether they also want to get Medicare as secondary coverage, or perhaps simply
drop the employer plan and rely totally on Medicare.
I did not recommend
that solution to Earl, because he asked what I would do if I had unlimited
funds for health insurance.
In the real world,
however, few people have unlimited funds. So, I’d first compare his wife’s very
expensive coverage with what she could get as a covered spouse on his employee
plan.
If he needs more medical
care as he ages (which is likely), he can then beef up his coverage by adding
more pieces of Medicare
Because Earl earns
enough money to get dinged with Medicare’s high-income surcharges (a nice
problem to have, by the way), I’d seriously consider moving her onto the
cheaper company plan and self-insuring for the things covered by the expensive
plan and not the company plan.
I’d then probably get
the company’s PPO plan, but would first make sure that the doctors my wife and
myself want to use were in that plan’s provider network.
I’d then tell Earl to
get only the premium-free Part A of Medicare and, as with his wife, self-insure
for any expenses not paid by insurance.
Earl is in great
health now, but if he needs more medical care as he ages (which is likely), he
can then beef up his coverage by adding more pieces of Medicare.
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