Can Business Owner T65 enroll into a Medicare plan and maintain his small group?

[wehotex]

Does the business owner need to stay on the small group policy to keep the group intact for his employees? If he gets his own individual Medicare supp or MAPD and leaves EGHP, would it affect the group?

Does it matter if the group is less than 20 or 20 and more?
I have a meeting where this question might come up and I want to know how to answer it.

 

[Fisher]

If it were me, I'd be calling the company issuing the EGHP with this question.

 

[sshafran]

If it were me, I'd be calling the company issuing the EGHP with this question.

I agree

Does the business owner need to stay on the small group policy to keep the group intact for his employees? If he gets his own individual Medicare supp or MAPD and leaves EGHP, would it affect the group?

Does it matter if the group is less than 20 or 20 and more?
I have a meeting where this question might come up and I want to know how to answer it.

Like Fisher said, have him check with his group plan. But, I have had a few business owners do this exact thing. Careful re: IRMAA. But often they are paying so much for EGHP that it's a pretty good deal for them and their company for them to move to Medicare.

 

[Dave G]

Employee benefits used to be my main market so know something about this question.

First, as long as minimum group size requirement is met, it should not matter if the owner is not enrolled on the group. Employees with a valid "waiver" should not count against the minimum participation requirement. Agent should obtain a waiver form signed by owner and submit to carrier. Eligibility/Enrollment in Medicare has always been a valid waiver in my experience.

Second, group size is VERY important, but for another reason: If under 20 employees (Federal COBRA rules apply), Medicare will be primary to any other insurance, including that provided by the group. If person is Medicare eligible, carriers may pay only the secondary payer obligation, even if the employee is not enrolled in Medicare! This can leave the employee exposed to unlimited potential out-of-pocket costs. The LAST person to drop in this bucket is the owner.

Also, for groups under 20, the employer plan can require person enroll in Medicare or the employer can make them ineligible for group health plan. If deemed not eligible for the group, same rules must apply to ALL employees in same position, i.e. plan cannot favor any class of employees including the owner.

If group has 20 or more employees, or Full-Time Equivalents (FTEs) it's the opposite of the above. The Employer Group Health Plan (EGHP) is deemed the primary payer, even if the employee has Medicare. Further, the large employer cannot even suggest the employee dis-enroll for Medicare, much less require it.

Also, earlier suggestion to check with carrier is always a good idea. You may also figure this out for yourself by reading the Coordination of Benefits section of the Employer Group Health Plan. It could contain specific wording about presence/absence of Medicare.

Another sticky wicket: Remember, there is no automatic "cross over" of claims between the EGHP and Medicare. Medicare related expenses are submitted separately to the group plan. (Compare this to "seamless" claims processing with Original Medicare and Medicare Supplement plans.)

LAST BUT NOT LEAST: There are major issues regarding ability to safely delay enrollment in Medicare because of group coverage post-age 65. Key is maintaining "continuous enrollment" in an EGHP based on "active employment" status. This is required to claim a Special Enrollment Period (SEP) into Medicare. A major landmine is COBRA is NOT deemed coverage based on "active employment" status. Critical to SEP status requires "active employment" during the 4-months that include the month the employee turned age 65 (or first eligible for Medicare) and the immediate 3-months after. Failure to do this can result in denial of the Medicare application. If denied enrollment, they will have to wait to the next General Enrollment Period to sign up for Medicare.

Agents and physicians should abide by the same rule: First, do no harm.

 

[wehotex]

Employee benefits used to be my main market so know something about this question.

First, as long as minimum group size requirement is met, it should not matter if the owner is not enrolled on the group. Employees with a valid "waiver" should not count against the minimum participation requirement. Agent should obtain a waiver form signed by owner and submit to carrier. Eligibility/Enrollment in Medicare has always been a valid waiver in my experience.

Second, group size is VERY important, but for another reason: If under 20 employees (Federal COBRA rules apply), Medicare will be primary to any other insurance, including that provided by the group. If person is Medicare eligible, carriers may pay only the secondary payer obligation, even if the employee is not enrolled in Medicare! This can leave the employee exposed to unlimited potential out-of-pocket costs. The LAST person to drop in this bucket is the owner.

Also, for groups under 20, the employer plan can require person enroll in Medicare or the employer can make them ineligible for group health plan. If deemed not eligible for the group, same rules must apply to ALL employees in same position, i.e. plan cannot favor any class of employees including the owner.

If group has 20 or more employees, or Full-Time Equivalents (FTEs) it's the opposite of the above. The Employer Group Health Plan (EGHP) is deemed the primary payer, even if the employee has Medicare. Further, the large employer cannot even suggest the employee dis-enroll for Medicare, much less require it.

Also, earlier suggestion to check with carrier is always a good idea. You may also figure this out for yourself by reading the Coordination of Benefits section of the Employer Group Health Plan. It could contain specific wording about presence/absence of Medicare.

Another sticky wicket: Remember, there is no automatic "cross over" of claims between the EGHP and Medicare. Medicare related expenses are submitted separately to the group plan. (Compare this to "seamless" claims processing with Original Medicare and Medicare Supplement plans.)

LAST BUT NOT LEAST: There are major issues regarding ability to safely delay enrollment in Medicare because of group coverage post-age 65. Key is maintaining "continuous enrollment" in an EGHP based on "active employment" status. This is required to claim a Special Enrollment Period (SEP) into Medicare. A major landmine is COBRA is NOT deemed coverage based on "active employment" status. Critical to SEP status requires "active employment" during the 4-months that include the month the employee turned age 65 (or first eligible for Medicare) and the immediate 3-months after. Failure to do this can result in denial of the Medicare application. If denied enrollment, they will have to wait to the next General Enrollment Period to sign up for Medicare.

Agents and physicians should abide by the same rule: First, do no harm.

Thank you for this information! In the presentation, I am including about 10 pages from the Medicare & You handbook that describes applying for Medicare.
Concerning the insurer paying only secondary when Medicare eligible did not apply, how common is that? I’ve never heard of that before. I usually tell a working person with good EGHP and no HSA to at least apply for Part A (free) and then use the SEP to apply for Part B when retiring from EGHP with active employment.

But really, the person could apply for A & B at a later time without penalty as long as employee and/or spouse’s coverage is based on active employment.
The recent annual AHIP certification exam mentioned the part about employer under 20 making the Medicare-eligible enroll into Medicare. I suppose that would lower the EGHP premium by a good amount?
A local group broker mentioned to me that owner would agree to pay at least 50% of employee only monthly premiums and that owner could use waiver as you stated.

 

[Dave G]

You are giving your clients partial info regarding small groups and need for Medicare enrollment. Federal rules allow all small group plans to limit payment to only they amount they owe if member had Medicare A and B in-force. It is possible some carriers may not enforce this. In my home state BCBS was still paying as primary payer where person lacked enrollment in Medicare. However, I just had an agent read me the Coordination of Benefits provision from a group policy for one of his clients that said carrier can limit payment!

So telling a prospect/client in a small group they don't need Medicare (A and B) is setting yourself up for an E and O claim! Information is OK; recommendations? NO. Send them back to group agent, Customer Service for group plan or have them read their own contract or certificate of coverage.

Regarding lower premium for small groups where member enrolls in Medicare: Sorry, the ACA put an end to that. Pror to the ACA, small group plans could use a "Medicare Wrap" arrangement where group acted as secondary payer at reduced rate. Those days are gone, at least where I operate (DC, MD, VA) and most likely all other states.

Btw, I got out of all group plans 6 years ago to go all-in on Medicare. Best decision I ever made. I network with several group guys who are consistent lead sources.

 

[wehotex]

You are giving your clients partial info regarding small groups and need for Medicare enrollment. Federal rules allow all small group plans to limit payment to only they amount they owe if member had Medicare A and B in-force. It is possible some carriers may not enforce this. In my home state BCBS was still paying as primary payer where person lacked enrollment in Medicare. However, I just had an agent read me the Coordination of Benefits provision from a group policy for one of his clients that said carrier can limit payment!

So telling a prospect/client in a small group they don't need Medicare (A and B) is setting yourself up for an E and O claim! Information is OK; recommendations? NO. Send them back to group agent, Customer Service for group plan or have them read their own contract or certificate of coverage.

Regarding lower premium for small groups where member enrolls in Medicare: Sorry, the ACA put an end to that. Pror to the ACA, small group plans could use a "Medicare Wrap" arrangement where group acted as secondary payer at reduced rate. Those days are gone, at least where I operate (DC, MD, VA) and most likely all other states.

Btw, I got out of all group plans 6 years ago to go all-in on Medicare. Best decision I ever made. I network with several group guys who are consistent lead sources.

When I read your 2nd and 3rd paragraphs, are you saying that the employer can MAKE their employee get Medicare A/B AND pay $170.10 monthly premium PLUS make them continue to pay their EGHP premium (if any).
It doesn’t seem very fair to me.
Would the employer just then suggest to the employee to drop EGHP and find his own Medicare coverage?
What would happen to coverage for any dependent who might be on the EGHP if employee gets his own individual Medicare coverage?

 

[Dave G]

Hello Guru,

You are on the right track here but maybe this will help further.

The small group employer and/or carrier may require those obtaining Medicare entitlement (like reaching 65) to dis-enroll from the group plan in lieu of Medicare. But if the employer/carrier allows employee to continue coverage, the employee can choose to either: a) leave the group and get a Medicare Supplement or enroll in a Medicare Part C Advantage plan; or b) remain on the group and pay whatever premium is required for enrolled employees.

For b) perhaps the employer could reduce the healthcare contribution required by Medicare enrolled employees, but expect the carrier to continue to bill the group the full rate. Again this is thanks to the ACA....helpful to folks in many respects, but not this one.

If the employee elects or is required to leave the small group plan, covered dependents can either: a) elect any benefits continuation the state requires to be offered (mini-Cobra) or b) apply for an ACA compliant individual marketplace plan with loss of coverage as the qualified event; or c) Enroll in an ACA individual plan during next available Open Enrollment period.

The only thing the employer can do is decide to provide group health benefits to those with entitlement to Medicare or not. Even here, employer choice may be limited by rules of the current group contract.

Keep in mind, we're talking only medical/drug coverage; the employee may still be eligible for dental, vision, life or disability benefits irrespective of the medical plan election. This depends on the group contract. If benefit is "stand-alone" OK, but not if benefit is attached as rider on the underlying medical plan.

Not fair? I agree. Better rule would be all group medical and drug plans should be deemed "primary" to Medicare (treat small groups the same as large ones). This would help keep folks from unexpected/uninsured costs and agents out of trouble. Until then, tread carefully and write your Congress-person.

I got a problem right now with an employer group that bounces back and forth to under 20 vs. over 20. Keep in mind, this refers to the number of employees or FTEs, and NOT to how many people enrolled on the actual plan!

Does this help?

 

[kgmom219]

Wow. This is a lot of crap for a simple question.

100% absolutely, I do it every month, get him off the group and onto Medicare.

And assuming the group has less than 20 employees, you don't have an option.

Want to know how many 2 person groups I have with only 1 person active, because the other person is on Medicare?

 

[DS4]

Wow. This is a lot of crap for a simple question.

100% absolutely, I do it every month, get him off the group and onto Medicare.

And assuming the group has less than 20 employees, you don't have an option.

Want to know how many 2 person groups I have with only 1 person active, because the other person is on Medicare?

I have probably 10 like this