COURTESY OF CARROLL E. HARPER
Many employees, especially in small group plans (less than 20 employees) continue to work beyond Medicare.
Problematic are two very important concerns with respect to Medicare Part B and Medicare Part D.
Let’s review each separately, so not to confuse one with the other.
Medicare Part B is the medical component that covers doctor’s visits, surgery, testing, lab work, durable medical equipment and a host of other medical services. When a Medicare beneficiary works beyond their initial eligibility of age 65 for an Employer Group Plan with less than 20 employees, most plans will NOT pay the Part B benefits if the Medicare eligible employee opts not to sign up for Medicare Part B, which after a deductible of $240.00, pays 80% of the reasonable amount. What does this mean to the employee who is covered under the Group Health Plan should the employee have major surgery? This means that the Group Health Plan will only pay the 20%, the Medicare employee will be responsible for the 80%! Have I got your attention? In Maine, currently there are 6 companies actively marketing small group plans. At last count, only 2 of the 6 companies would pay the Part B Medicare expense, should the Medicare eligible employee opt not to enroll in Medicare Part B when eligible.
Medicare Part D is the Prescription Drug Benefit offered by insurance companies. Up until 2024, small group plans for the most part were considered “creditable coverage”, meaning that they were as good or better than the Medicare Part D coverage. With the passage of the Inflation Reduction Act, Medicare Part D got enhanced coverage. Beginning January 2024, the Medicare beneficiary no longer has to pay the final 5% catastrophic phase of Medicare Part D and beginning January 2025, the so called “donut hole” or gap in Medicare’s prescription drug coverage is ending. The Part D plans for 2025 will have an annual cost sharing cap set at $2,000.00 for 2025 and indexed each year thereafter.
With the implementation of this change, the drug coverage under many small group plans (and some large groups) are no longer considered “creditable”! This means that if the Medicare employee remains covered under the small group plan and later comes off the group plan and enrolls in a Medicare Part D prescription drug plan, a penalty will be assessed. It is based on the number of months that the employee went without “creditable coverage” and is a lifetime penalty.
Both the Part B and Part D concerns will require the Medicare eligible employee to decide as to whether to remain on the small group plan and face potential medical expenses as outlined in the Part B section of this article, pay a prescription drug penalty by remaining on the group that has no “creditable drug coverage”, or come off the small group plan and enroll in an individual Medicare plan with Medicare Part D prescription drug coverage.
If you have questions about Part B and Part D and are a Medicare eligible employee working for a small group of less than 20 employees, you should ask your employer for information regarding this very important part of your retirement planning.
