Medicare and employer retiree health benefits

Ellen – Pa.: My husband plans on working beyond 65. As part of a buyout option he took, he has a lifetime medical plan with a former company. He said the company said he must apply for Medicare at 65, so his benefits with this former employer can become secondary. In this case, do we take this as a “no choice option” with this buyout plan and that what this company is telling him is correct? Would this mean we have to continue to pay for the company’s benefits plus the added fee for Medicare benefits?

Phil Moeller: Yes, it does. Most employer retirement health plans are designed so that Medicare becomes the primary payer when a covered person turns 65. At the time, the employer plan becomes the secondary payer. While it might seem unfair that you have to pay for both the employer plan and Medicare, the costs to you for the employer plan are based on its assumption that you will get Medicare. This lowers the costs to the employer plan, and these lower costs should be reflected in the design of its premiums. Also, when you say that Medicare will become the primary payer, does this include drug coverage as well, or will your employer plan remain primary when it comes to Part D drug coverage? Once you find this out from the retiree plan, you can decide if it would be cheaper for you to leave the employer plan and rely totally on Medicare. In most cases, it’s still better to stay on the employer retiree plan. Its role as a secondary payer most likely will limit your out-of-pocket expenses. In Medicare, you would need either a Medigap or Medicare Advantage plan to achieve this protection. And you would thus need to include these costs along with your other Medicare coverage to get an accurate comparison of a Medicare-only coverage plan versus your Medicare-retiree plan.

Michele: My parents are 67 and 69 years old. They reside in California. My father worked as a longshoreman for his entire career. He retired with full medical benefits. Now I’m confused. My parents tell me that they can’t use their private health insurance because of Obamacare/Medicare. First, they must see a doctor that accepts Medicare, and whatever costs that Medicare doesn’t pick up their private insurance will pick up. How is this possible that they are being forced to use Medicare when they have private insurance? Most doctors don’t even accept Medicare patients. How is it possible that my parents are being denied medical help when they have private insurance? Can they cancel Medicare and use their private insurance? This is a very scary prospect for their future medical needs. As their daughter I need to find the answers, so I can assist them now and in the future.

Phil Moeller: Michele, nearly all retiree health insurance programs work only in conjunction with Medicare, not in place of it. I’m not aware of the specific details of your parents’ plan, but your description is consistent with a situation where Medicare is the primary health insurer payer, and the retiree plan is the secondary payer. Contrary to what you write, nearly all doctors accept Medicare. If your parents have been denied medical help, this is wrong and should not be the case. I’d like to know the details of any such denials. As for cancelling Medicare, this is not possible, and even if they could, it’s unlikely their retiree plan would provide them primary coverage. You can follow-up on this on their behalf, but you might need them to give you permission to represent them in health care insurance discussions. If you can, you should speak with their retiree health insurance plan and ask a representative to explain how the plan works and what Medicare’s role is. You also can get free consumer Medicare advice by calling the State Health Insurance Assistance Program (SHIP).