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How This Enduring Insurance Program Fits Into Entrepreneurship

Most business leaders are familiar with the insurance benefits their company offers. Yet there is another health insurance scenario that they may come across. That’s the issue of Medicare eligibility and enrollment. The two most common scenarios business leaders face with respect to this coverage are: dealing with their aging parents, and when one of their employees is turning 65.  While similar, both scenarios present unique challenges and opportunities to a business leader.   

The ‘Aging Parent’ Scenario

Having a parent or other relative turn 65 is their first opportunity to address Medicare benefits and enrollment. It’s also a chance for the business leader’s child (or children) to help with this process.  The importance of this age milestone is determining if a parent must enroll immediately in Medicare or if they can delay enrollment into the future. Ultimately, enrollment decisions and actions will depend on their health insurance status as they approach their 65th birth month.

Here’s something to think about if you have a parent or relative who is approaching their 65th birthday. If they are retired or temporarily not working, and if they do not have access to spousal benefits or other creditable coverage, enrollment at age 65 is advisable. This is because they do not have alternative coverage to delay Medicare enrollment. Try to have a discussion with your relative or parent(s) to determine which factors apply.   

If your parents or relatives identify with this scenario, they have two ways to enroll:

Option 1

If they are receiving Social Security Income (SSI) benefits prior to age 65, they are automatically enrolled in Medicare Parts A and B. Their ID card will arrive in the mail 90 days prior to their 65th birth month. 

Option 2

If they are not receiving SSI benefits, they must initiate enrollment. There are several ways to apply. We recommend that they start the application process 90 days prior to their 65th birth month.  Application options include applying through the mail, online through ssa.gov, or calling the Social Security Administration. They can also go to their local Social Security office; however, these offices have been closed to walk-ins due to Covid-19. Whichever method they choose, their Medicare card will typically arrive within 30 days of receipt of their application.

If you’re facing this scenario, don’t fret. This is a great opportunity to engage your parents or relatives in a discussion about their health. You can also help them plan for their future health needs. Help them figure out how to use the technology that’s associated with enrolling in Medicare. 

The Medicare-Eligible Employee Scenario

The second scenario is where one of your employees is Medicare-eligible or currently enrolled in it. If your company has employees who are electing to work past age 65, below are some important guidelines:.  

If your company has 20 or more employees, your Medicare-eligible employee can delay their enrollment. This is because Medicare deems your company’s health insurance coverage as creditable.  Your company’s health insurance is considered the primary payer of claims. Therefore this allows Medicare-eligible employees to delay enrollment into Part B. If an employee identifies with this scenario, there are two reasons for them to enroll in Part A:

First, Part A acts as a secondary payer to your company’s health plan for certain medical services.

Secondly, for most, there is no premium cost for Medicare Part A. This is simply because either the employee or their spouse has worked and paid Medicare taxes for 10 years or 40 quarters.  

HSA accounts

Note that if your company offers an Health Savings Account (HSA) as part of a high-deductible health plan, and your Medicare-eligible employee participates in the HSA, the employee will not want to enroll in any Medicare, including premium-free Part A.  Medicare has clear guidelines regarding enrollment that prevents participants from funding a HSA while enrolled in Medicare. If an employee does enroll and continues to fund their HSA, these actions could lead to tax penalties and interest accrued.

Small group employers

If your company is a small group employer with under 20 employees, a Medicare-eligible employee’s enrollment into Parts A and B is required when they turn 65. In this scenario, Medicare becomes their primary payer of claims and the company will be secondary.  If an employee elects not to enroll in Medicare when turning 65, they run the risk of their insurance provider covering only the secondary payer rules. This leaves them with primary payer responsibilities. Primary payer responsibilities, as they relate to Medicare Part B, can equate to as much as 80% of all eligible claims with no spending limit.

Further decisions for employees choosing Medicare

There are additional aspects of Medicare that are equally important to consider when employees make final decisions, such as confirming the credibility of the company’s prescription drug coverage.   Understanding how an employee’s personal health insurance situation relates to Medicare as they approach your 65th birthday is also crucial.

If you’re managing your company’s HR function, or if you have an HR professional assisting you, you may want to make sure that you’re keeping an eye on when employees are turning 65, whether your company qualifies as a small group employer or a large group employer, and what other compliance issues could come up if you employ someone who is a Medicare-eligible or Medicare-enrolled.

Business leaders with aging relatives or employees who are turning 65 soon should consider how best to engage them proactively and in the most helpful way possible. They can start by sending them this post. The best initial recommendation is to encourage your relatives or employees to stay engaged, ask questions and seek assistance from a Medicare insurance professional whenever possible. For more information on eligibility or enrollment you can visit www.medicareportal.org

This article was written by guest blogger John Norce. John began MedicarePortal.org 4 1/2 years ago. The company has helped thousands of individuals evaluate and ultimately secure Medicare coverage. Feel free to reach out to John with any questions.

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