What Older Workers Need to Know About Medicare
PUBLISHED BY: LFN Primary
Virginia Beach, VA (Law Firm Newswire) July 15, 2016 – Older workers need to be wary of some potential Medicare errors that may come up if they intend to continue working past the age of 65.
Approximately one-third of Americans within the age group of 65 to 69 stay in the workforce. This rate is 50 percent higher than it was ten years ago. Thus, an increasing number of older Americans are not getting Medicare upon reaching age 65.
Andrew H. Hook, a prominent Virginia elder law attorney of Hook Law Center with offices in Virginia Beach and northern Suffolk, states, “Older workers are advised to be aware of their options with respect to Medicare so that they can make informed decisions about their health care coverage.”
If an older individual keeps working, and is covered by an employer’s group health insurance, it is unlikely that the employee will need Medicare. In addition, if the employee loses health insurance through the employer, and then gets Medicare, after which the employee secures a new position that offers health insurance, the employee will not have to keep Medicare. This is frequently surprising to people who believe that they have to retain Medicare coverage for the remainder of their lifetime after their initial enrollment.
However, there are exceptions to, and warnings concerning, the general rule. In order to avoid possible difficulties, keep in mind these three principal instructions:
1. Employees who work for small businesses may be required to enroll in Medicare. If an employee is approaching age 65, and works for an employer with fewer than 20 employees, then the employee who is about to turn 65 will probably have to enroll. In health insurance plans for small businesses, Medicare is the primary payer of insurance claims for employees age 65 and older. The secondary payer is the employer plan.
2. Employees should review their employer’s Part D plan. Those who work for larger companies do not confront this enrollment rule. However, there is a technical requirement for the avoidance of Medicare coverage. One requirement of Medicare is that an individual’s employer drug coverage is creditable, which means that it has to be as comprehensive as a Medicare Part D prescription drug plan. If it is not, the employee would be required to enroll in a Part D plan. If the employee fails to enroll, there could be premium surcharges against the employee for failing to enroll in a timely manner. Therefore, employees nearing age 65 are advised to confirm with their human resources manager that their drug coverage complies with this rule.
3. Consider enrolling in Medicare Part A. In the event the employee does not have to enroll in Medicare at age 65, the employee is encouraged to enroll in Medicare Part A, which pays for hospital expenses and brief stays in nursing homes. Those who are eligible for Social Security due to their employment records can obtain a waiver of Part A premiums. Usually, this requires the employee to work 40 quarters in positions in which the employer pays Social Security payroll taxes.
In this case, Medicare Part A is a secondary payer, meaning that it can assist with expenses that are not covered by the group insurance provided by the employer. Although the deductible for each hospital stay is $1,260, medical expenses can easily become more expensive than that. However, enrolling in Part A has a major disadvantage in that the employee will lose eligibility to contribute to a tax-advantaged HSA. If an employee currently has an HSA, a comparison should be made between the benefits of Part A and the loss of the ability to make contributions to the account. If the employee opts to cease contributing to an HSA, they can still retain any funds that have accumulated. Those funds will remain tax-free provided the employee spends them on qualified medical expenses.