If you are now eligible for Medicare or may become eligible forMedicare during 2013 and are currently on a group medical insurance plan through your employer or a spouse’s employer, please take the following steps now to insure that you won’t pay a penalty if you delay your enrollment into Medicare and plan to stay on the group plan.
1. Contact the human resource person where you work and ask ifyour prescription plan is “creditable” to what is available to you through Medicare beginning at age 65. “Creditable” means that the value of the prescription drug benefit is, on average for all plan participants, as good as the Medicare prescription drug benefit.
2. If your employer says that you are in a group prescription planthat is not considered “Creditable”, then call me right away so I can explain Medicare’s imposed penalty that will be accessed to your Part D Prescription premium when you do join Medicare at a later date.
Here at Keating and Associates we design large group medicalinsurance plans for employers who offer high deductible plans to their employees. This often means that the prescription coverage in a large group plan with a high deductible is not “creditable” to what Medicare offers. This example might clarify how the Medicare rule works.
A valued employee will turn age 65 during September of 2012. Theemployee will be eligible for Medicare’s Part A Hospital insurance and receives the Part A Hospital card in the mail. In large group plans, Part A (Hospital) becomes secondary coverage. The valued employee decides to continue working and stay on the company group medical insurance plan that also provides prescription coverage. The employee does not enroll in Medicare Part B (doctors) since there is no need, but forgets to check with the Human resource department about asking the question, “is my prescription coverage “creditable” to what I can get through Medicare?”
Now it’s September of 2013, one year later ,and the valued employee decides to join Medicare and learns that her coverage on the group plan was not “creditable” to Medicare . Much to her surprise, she learns that there will be a penalty assessed for the rest of her life. The penalty is calculated using the average Part D premium for all Medicare prescription plans offered in the nation. Last year the average premium was $32. The penalty assessed is 1% of the average premium for every month the employee went without enrolling in the Part D prescription plan because the employee’s prescription plan didn’t meet Medicare’s “creditable” definition.
This happened to one of our clients who was on a large group plan,but when she called for help, I had to tell her sorry, you have a 12 month penalty that will be added to the premium you choose now. (12 mo. x .32=$3.84) She enrolled in a Part D prescription plan with a premium of $25.80. The provider notified her that Medicare added the $3.84 to the premium and her new premium amount will be $29.64. The $3.84 per month penalty will stay with her as long as she lives.
If this situation applies to you, contact the Human Resource personand pop the question: “I’m eligible for Medicare Prescription coverage but want to stay on the group health insurance plan, is my prescription coverage under the plan “creditable”? If the answer is yes, do nothing. If the answer is no, call me right away and I’ll set up a plan so you won’t be hit with the lifetime penalty. 785-537-0366
RETIREE WHO LEAVES THE EMPLOYER GROUP PLAN AND JOINS MEDICARE WHEN ELIGIBLE AT AGE 65!
For those who say, I’m retiring and leaving my group plan and willenroll in Medicare Part A-Part B and plan to get a Medigap supplement plan, but because I’m taking no prescriptions, I won’t enroll in Part D (prescriptions). This happened to a client recently. The client was age 65 in 2006 when the Prescription coverage program was first offered. The client did not enroll in the Prescription plan offered. The client called me during 2012, and said, I believe I need to enroll now. That call was made six years after he was first eligible. I had to be the bearer of bad news and told the client, you owe a penalty of $23.04 (72 mo. x $.32) and that will be tacked on to your new $40 premium for life. Much to the shock and surprise to the client, his new premium was $63.04 instead of $40.
If you are not taking any prescriptions, I can put you in the lowestpriced Part D plan which is $15.10 per month. That’s the strategy I use for Medicare eligible clients who do not take medications. It keeps the premium low, and avoids the penalty.
Be wise when you turn 65! If you keep working and stay on thegroup plan, ask if it is “creditable”. If you leave a group plan and enroll in Medicare, include the Part D (prescription) coverage even if you take no prescriptions, and you’ll avoid the penalty.
Have a great weekend and enjoy this cool weather we are having in the Midwest.
Coach
