Medicare’s Annual Enrollment Period (AEP) is here which means your Medicare eligible or “near eligible” employees are inundated with confusing communications. For HR professionals, it can be a challenge to assist with Medicare questions. The following are three key things all employers must know!
1. Is your group size considered large or small?
In general, employers with fewer than 20 employees should direct their employees to enroll in Medicare Parts A and B as soon as they are eligible*. Under current Federal guidelines, Medicare is the primary insurer and the employer’s plan is secondary.
If you have 20+ employees, you must offer Medicare-eligible employees the same coverage offered to all employees. Your group plan remains primary and Medicare is secondary. Employees may enroll in Medicare Part A (typically no cost), but Part B is not required by most large employers as long as the employee continues to work.
**NOTE** If your employee is enrolled in a high-deductible health plan and wishes to continue making health savings account (HSA) contributions, they cannot be enrolled in Medicare Parts A or B, as this will result in tax penalties.
*For those entitled to Medicare due to disability, Medicare will be primary if your company has less than 100 employees.
2. How does Medicare work with COBRA for the employee?
If the employee retires and elects to receive coverage through COBRA, this does not extend their enrollment period upon retirement. They typically have eight months after employment ends to enroll in Medicare Part B without penalty.
For Part D (prescription drug coverage), as long as the COBRA drug coverage is creditable (as good as or better than Medicare Part D), the employee does not need to enroll in Part D until COBRA benefits end.
3. What reporting/notifications are required?
Employers whose health care plans cover Rx benefits for any Medicare-eligible employees or retirees must notify those individuals by October 15th of each year whether their drug benefit is “creditable coverage.” This means that it is expected to cover, on average, as much as the standard Medicare Part D prescription drug plan.
Employers must also report annually to CMS whether their drug benefit is creditable coverage. You are required to provide the disclosure within 60 days after the beginning date of the plan year. Disclosures must be completed on the CMS website.