Jul 31, 2019 10:01 AM EDT Philip
Moeller
More than 10 million of the 63.6 million people who received
Social Security benefits last month are disabled. For those under the age of
65, being approved for Social Security Disability Income (SSDI) payments also
includes eligibility for Medicare, usually after a two-year wait.
Despite being disabled, many SSDI recipients are able to
work and thus become eligible for employer insurance plans. The coverage
offered by employer plans has become more costly, leading many plans to adopt
high annual deductibles that can raise out-of-pocket costs for employees. These
changes have made it much more likely such employees will not drop Medicare but
keep it in place, or in addition to an employer plan.
Here’s an email from Steve in Massachusetts that illustrates
the issues and decisions that people with disabilities may face if they return
to work.
“I am 44 years old, blind, and have had Medicare for about 10
years because of my disability. I did go back to work full-time a few years ago
but have continued to pay for Medicare (Parts A and B). It is my only insurance
right now, but the out-of-pocket costs are getting expensive.
As a result, I have recently gotten health insurance from my
employer and I had planned to stop Medicare. I saw my doctor last week and told
him the situation. He recommended that I not stop my Medicare because he said
that it could be very hard to get it back, given that I am more than 20 years
away from retiring. He recommended that I keep Medicare and look for a
secondary insurance. I trust my doctor, but I do not think he is an insurance
expert by any means!”
One-size-fits-all answers don’t work here. A person’s
specific circumstances – age, health needs, insurance plans, and the like – are
all different. What they do share is the need to understand how Medicare does
and does not “work” with other insurance programs. This is a big-enough deal at
Medicare that the program has an operations manual dedicated to what are called
“coordination of care” rules.
Steve’s doctor deserves praise for at least thinking of this
issue. Most doctors know very little about health insurance or the financial
implications of their treatment. But Steve is right to want a second opinion
about what his doctor told him!
Medicare
rules permit a disabled person to reacquire Medicare coverage at any time prior
to age 65.
Medicare rules permit a disabled person to reacquire
Medicare coverage at any time prior to age 65. The issue here is whether, when
the person re-enrolls, he would be subject to substantial late-enrollment
penalties because he did not have continuous Medicare coverage.
For someone on Medicare who is not disabled, getting
employer insurance clearly permits them to drop Medicare without encountering
penalties upon re-enrollment. The same should hold for those with disabilities.
However, I’ve encountered many illogical things about Social Security and
Medicare, so I recommend that people contact Social Security to confirm how the
agency would treat them.
The issue about whether to keep Medicare or not is on the
hit parade of Ask Phil questions. One of the most popular Ask
Phil columns looked in detail at these choices, and it remains the topic most
frequently raised by readers. Historically, most would have dropped Medicare in
favor of solid and less expensive employer insurance plans. But the rise of
high-deductible health plans has increased the appeal of having employer
insurance and Medicare.
In nearly all cases, the employer plan is the primary payer
of covered claims and Medicare is what’s called a “secondary” payer.
If a person has a high-deductible plan with, for example, a
$3,000 deductible, basic Medicare (Parts A and B) can be used to pay claims in
the deductible phase of the coverage. Even with its monthly cost of $135.50 for
most enrollees, Medicare can make sense in some situations.
Beyond high deductibles, Medicare also can help pay some of
the covered expenses not fully paid by an employer plan. Usually, it does not
make sense to get a Medicare Part D plan here or a Medigap supplemental plan.
You would be paying for things your employer plan already covers.
Before making this decision, however, it’s important that
anyone eligible for Medicare by virtue of age or disability ask their employer
to certify that the employer’s drug coverage is at least as good as a typical
Part D plan. If an employer plan does not meet this “credibility” test, then
the person must get Part D. Employers are required to provide credibility
statements annually.
One final point here is that anyone in this situation who
must get a Part D plan need not also pay for Part B of Medicare, although they
do need to sign up for premium-free Part A.
I am pretty sure that people with such options can get their
coverage coordination questions answered by talking with someone in their
employer insurance benefits office. I am also pretty sure, based on literally
thousands of reader emails, that talking with their insurer has a popularity
rating akin to having a root canal without anesthesia. Time and time again, the
best advice I have is that people should speak first to their health insurers,
not to me.
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