1. Services offered through Mesirow Insurance Services, Inc. October 2014
Medicare enrollment rules include some
details that are often not widely known by
group administrators or employees. The
trend toward later retirement age and an
increase in the number of older employees
mean that these situations will occur
with increasing frequency. The following
examples highlight two enrollment rules
that can drastically impact coverage if
overlooked.
Retirees have eight months to apply
for Medicare Part B after leaving group
coverage.
Anne Morton, age 68, knows that an
individual can apply for Medicare Part B
while on group coverage or within eight
months of leaving active group coverage.
At the end of October 2012, Anne retired
and continued on COBRA. She calculated
that beginning May 2014, after 18 months
on COBRA, she will then have eight
additional months to apply for Medicare
Part B and supplemental coverage.
In May 2014, Anne discovered that
COBRA did not count as active group
coverage and the eight-month special
enrollment window to apply for Part B
ended for her on June 30, 2013, eight
months after she left active employment.
Anne must wait for the general annual
open enrollment for Part B, January
through March, for an effective date for
the following July. Anne has exhausted
her COBRA and will not be covered by
Medicare Part B until July 2015.
Anne will also pay a premium penalty for
not enrolling during the required time
period.
Employees who elect COBRA over age 65
must have Medicare Parts A and B.
Mary Roberts, is a 72-year old long-
standing employee with ABC Widget
Incorporated, a large employer.
Mary retired May 31, 2014, but has
decided to stay on the group COBRA plan
until January 1, 2015, as she has met her
deductible for the year and likes her current
prescription benefits.
January 1, 2015, is still within the eight-
month special application window, and
Mary plans to get Medicare Part B and
supplemental coverage at that time and
terminate COBRA coverage.
In November 2014, Mary undergoes surgery
and is shocked to be responsible for paying
the first 80% of the charges.
She and her employer discovered that in
Illinois, for most employer based health
plans, COBRA pays secondary to Medicare.
Medicare is “assumed” for individuals over
65, even if someone does not apply for it.
In other words, even though Mary does not
have Medicare Part B, her COBRA plan
pays as though she does, and in effect, Mary
becomes the primary payer and COBRA is
secondary.
To add insult to injury, Mary has paid
COBRA rates the entire time.
Mary will be able to get Part B at this time,
but it will not be retroactive for the months
in which she thought she was covered by
COBRA.
These are only a few of the Medicare
enrollment rules. Make sure to talk with a
Medicare expert to help navigate these rules
when employees retire.
Sources:
Center for Medicareand Medicaid Services Booklet “Medicare
and You” 2014
“Who Pays First” Revised 2014
This article is intended as an overview and should not be
viewed as legal advice. Please consult with your attorney if
you have any questions.
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Timing Is Everything When Retiring and Applying for Medicare
Employers and employees are both at risk if Medicare deadlines are missed.
LIFE & DISABILITY
By Joanne Elster, Client Support Specialist
Mesirow Financial’s Life & Disability Practice