Life After 50 Expo

Dear Marci,

I will turn 65 and become eligible for Medicare soon. I have insurance coverage through a company that I retired from several years ago. Do I need to take Medicare? If I do, how will it work with my retiree coverage?

-Tito (Santa Fe, NM)

Dear Tito,

Retiree insurance is a form of health coverage an employer may provide to former employees. Retiree insurance is almost always secondary to Medicare, meaning it pays after Medicare and may provide coverage for Medicare cost-sharing, like deductibles, copayments, and coinsurance. Because retiree insurance is secondary, you should enroll in Medicare to be fully covered. If you do not enroll in Medicare, you will likely be without primary coverage, and will face a late enrollment penalty and gaps in coverage if you try to enroll at a later date.

You may be able to keep your retiree insurance as primary after you become Medicare-eligible if you have End-Stage Renal Disease (ESRD) or Federal Employee Health Benefits (FEHB).

Deciding whether to keep retiree coverage after you enroll in Medicare is a personal one that depends on your costs and anticipated health care needs. Retiree coverage premiums can be costly, but it may be worthwhile to keep your plan if you anticipate high Medicare costs. Retiree coverage may also pay for care or other items and services that Medicare does not cover, such as vision care, dental care, and/or off-formulary or over-the-counter prescription drugs. If the plan offers prescription drug coverage that you like, find out if the coverage is creditable and if you can delay Medicare Part D enrollment without penalty.

For more information on the services covered by your retiree insurance plan, contact your benefits administrator or you employer’s human resources department.

Retiree insurance may coordinate with Medicare differently depending on the type of plan you have. Below are a few common types of plans and how you might expect them to work with Medicare. Be sure to speak to your employer’s HR department for more information.

• Fee-for-service (FFS) plans pay for care from any doctor or hospital. FFS plans cover Medicare cost-sharing and generally act like a supplemental insurance policy.
• Managed care (HMO or PPO) plans require that you see in-network providers and facilities. Your costs are typically lowest when seeing providers who take both Medicare and your retiree insurance. When seeing Medicare providers who do not take your retiree insurance, you will pay regular Medicare cost-sharing amounts, and your retiree insurance may not pay at all.
• Employer-sponsored Medicare Advantage Plans offer Medicare-eligible individuals both Medicare and retiree health benefits. Some employers require that you join a Medicare Advantage Plan to continue getting retiree health benefits after becoming Medicare-eligible. You can always choose not to take your employer’s coverage and sign up for Original Medicare or a different Medicare Advantage Plan, but keep in mind that you may not be able to get that retiree coverage back if you want it at a later date.
• Employer-sponsored supplemental insurance offers secondary coverage for Medicare-eligible individuals. These plans often function similarly to Medigaps, meaning that they pay all or part of certain remaining costs after Original Medicare pays first. Remember: You can always choose not to take your employer’s coverage and sign up for a Medicare Advantage Plan or a different Medigap, but you may not be able to get that retiree coverage back if you want it at a later date.

-Marci