Medicare for Employers

Guide Topics

How do Employers Interact with Medicare?

• Understand the Points of Coordination, Avoid the Rest
  • Think of Medicare issues in a similar way that employers interact with personal tax issues related to employee benefits
  • Stick to a high-level overview, avoid advising on specific situations where possible, advise consultation with expert advisers where the employee needs more information
  • As with tax issues, most Medicare issues are unrelated to employee benefits and should not be addressed by employers
  • In those cases, it’s appropriate to route employees to the Medicare & You handbook, the Contact Medicare website, SHIP Medicare Counseling and/or the Consumer Assistance Programs (CAPs)

Medicare for Employers Topics for Discussion:

1. MSP: How the Medicare Secondary Payer rules affect employer-sponsored group health plans
2. COBRA: How the COBRA rules interact with Medicare in complicated (and confusing!) ways
3. Special Enrollment Periods: How to enroll in Medicare after loss of active employer coverage
4. HSAs: How and when Medicare affects HSA eligibility— including potential Part A retroactive concerns

Medicare Secondary Payer Who Pays First (and More)

Employers Subject to MSP Rules

MSP Applicability Based on Employer Size and Type of Entitlement

• In most cases, Medicare entitlement is based on age (65+) or disability. Different rules apply for both.

Entitlement Based on Age (65+)

• 20+ Employees: Must have 20+ employees on all days in at least 20 calendar weeks

Entitlement Based on Disability

• 100+ Employees: Applies to a “Large Group Health Plan”

The MSP Basics

• GHP Pays Primary for Active Coverage:
  • The basic rule of thumb for the MSP rules is that employers are prohibited from “taking into account” the Medicare entitlement of a current employee or spouse/child.

COBRA or Retiree Coverage

• MSP Does Not Apply: Medicare Pays Primary for retirees and COBRA qualified beneficiaries.

Prohibited Incentives: Can’t Encourage Medicare

Section 111 MSP Reporting for GHPs

• Section 111 of the SCHIP Extension Act of 2007 created a reporting requirement to ensure proper administration of the MSP rules in group health plans (GHPs).
• Employers are generally not RREs, those responsibilities fall on insurance carriers or third-party administrators (TPA).

How Medicare and COBRA Interact for Retirees

COBRA and Medicare

• Medicare “entitlement” means Medicare enrollment.
• Mere Medicare eligibility (e.g., reaching age 65) is not Medicare entitlement.

COBRA Qualifying Event: Two Requirements

1. Loss of coverage
2. Caused by one of the COBRA triggering events

Medicare enrollment almost always does not cause loss of coverage.

Medicare Enrollment Periods

Medicare Initial Enrollment Period

• Seven-Month Initial Enrollment Period around Age 65

Special Enrollment Period (SEP)

• Eight-month special enrollment period begins the earlier of:
  1. The month after employment ends;
  2. The month after active coverage ends.

Medicare Part D

Notice of Creditable Coverage

• To inform employees whether their employer-sponsored group health plan’s prescription drug coverage is at least as rich as a Medicare Part D plan.
• Important for avoiding late enrollment penalties upon Part D enrollment.

Medicare and HSAs

HSAs and Reaching Age 65 (Medicare)

• Employees do not lose HSA eligibility automatically upon reaching age 65.
• Loss of HSA eligibility occurs only upon Medicare enrollment.

Medicare for Employers – Top Five Issues

1. Medicare Secondary Payer (MSP): Must offer same benefits under same conditions to employees age 65+.
2. COBRA: Coverage terminates upon enrollment in Medicare after electing COBRA.
3. Special Enrollment Periods: Must enroll in Medicare within eight months to avoid penalties.
4. Medicare Part D: Must provide a Notice of Creditable Coverage annually.
5. HSAs and Age 65 (Medicare): Employees do not lose HSA eligibility until Medicare enrollment.