Many persons are covered under Employer sponsored plans. Coverage could be due to active work, due to retirement, or from Cobra election due to loss of coverage. What is selected could have an impact on Medicare coordination of benefits.
Active Employer Group Health Plans (EGHP)
For persons who have coverage based on active employment of their own or of a spouse's, and if they are also eligible for Medicare, they may have options to consider. Federal law determines when Medicare is the primary payer and when it becomes the secondary payer. If the beneficiary aged 65 or older is covered under an active Employer Group Health Plan (EGHP) and the employer has 20 or more employees, then the EGHP is Primary and Medicare would be secondary. In this situation, the beneficiary can decide if they want to enroll into Part B of Medicare or use the Special Enrollment Period to enroll into part B at a later date while still covered under the EGHP up to 8 months after active employment ends. For Medicare beneficiaries under age 65, if they are covered by an EGHP of their own, their spouses or a family member's with an employer who has 100 or more employees, then the EGHP would be primary.
(Note: If a beneficiary has Medicare based on End Stage Renal Disease (ESRD), there is NO Special Enrollment Period to enroll into Part B while working or up to 8 months after. A beneficiary in this instance if they did not accept Part B during their Initial Enrollment Period would only be able to get Part B during the General Enrollment Period each year (January thru March) which could cause a gap in coverage as Part B coverage would only begin July of that year).
As with any health insurance coverage, understanding the costs and benefits of an EGHP is important in determining which is the optimal coverage for the beneficiary's needs. Contact the employer for more details regarding that EGHP.
Retiree Group Health Plan (RGHP)
Many companies offer former employees the option to continue their health care coverage after retirement. Check with the employer if this is an option to consider. Because this is not from active work, Medicare would be the primary payer (unless on ESRD Medicare and beneficiary is in their 30 month coordination period). Contact the employer of the RGHP administrator to understand how the RGHP coordinates with Medicare as well as obtaining information on premiums, coinsurance/copays, maximum out of pocket costs, and any other limitations on coverage. If this coverage includes creditable prescription coverage, then the beneficiary may not need to enroll into a Medicare Prescription Drug plan. Understanding this coverage will allow for a better comparison with the other alternatives a beneficiary has when becoming Medicare eligible.
COBRA (Consolidated Omnibus Budget Reconciliation Act)
COBRA is the law that allows individuals to continue their group health coverage for a limited period of time after they leave employment or if their employer group coverage ends. Typically a person would be entitled to 18, 29 , or 36 months of coverage. The employer may require the person to pay the full cost of the insurance during this time. COBRA is applicable to group health plans with at least 20 employees (except for federal government and church sponsored plans).
Eligibility for COBRA depends on if a "qualifying event" has caused the individual, their spouse or dependent children to lose their coverage. "Qualifying events" include:
- Termination of covered employee's employment for any reason other
than "gross misconduct";
- Reduction in hours worked by employee;
- Covered employee becoming entitled to Medicare;
- Divorce or legal separation of spouse from covered employee;
- Death of the covered employee; or
- Loss of "dependent child" status under the plan's rules.
If a person is disabled, they may also be eligible to elect an 11 month extension of COBRA coverage to bring the total months of coverage from 18 to 29 months of coverage. The plan can charge qualified beneficiaries an increased premium up to 150 percent of the cost of coverage, during that 11 month extension.
The spouse or dependents may be entitled to up to 36 months of COBRA Coverage. For more information on federal COBRA, review " An Employee's Guide to Health Benefits Under COBRA" from the U.S. Department of Labor.
COBRA may be terminated before the time limitation when a qualified beneficiary enrolls in Medicare after electing continuation coverage or if they begin coverage under another group health plan as long as that plan doesn't impose an exclusion or limitation affecting a pre-existing condition.
If a beneficiary enrolled in Medicare (either Part A or B) prior to the qualifying event, then they may chose to elect COBRA coverage and would be entitled to the full 18, 29, or 36 months of coverage. Being entitled to Medicare cannot in that instance be used as a basis for terminating the COBRA continuation coverage.
Go to this site for more information on COBRA: http://www.dol.gov/dol/topic/health-plans/cobra.htm
Please see the Medicare publication Who Pays First.
Wisconsin Continuation Law
Wisconsin also has continuation and conversion rights that give certain individuals the right to continue their coverage for a period of time. Federal Cobra and Wisconsin continuation are very similar, but when both laws apply to the group coverage, the Office of the Commissioner of Insurance feels that the law most favorable to the insured should apply.
Wisconsin's continuation law applies to most group health insurance policies that provide coverage to Wisconsin residents and applies to group policies of any size. However, this does not apply to employer self-funded health plans.
Wisconsin's continuation law allows a person to continue group coverage for up to 18 months before needing to convert to an individual health insurance policy which provides similar benefits.
State law allows the beneficiary the right to continue group coverage or convert to an individual policy when becoming eligible for Medicare as long as the coverage does not duplicate benefits paid by Medicare.
For more information on Wisconsin's continuation and Conversion rights in Health Insurance policies, see the Fact sheet from the Office of the Commissioner of Insurance: http://www.oci.wi.gov/pub_list/pi-023.htm
Last Modified: 7/26/2016 1:46:35 PM