Medicare Coordination for Older Employees: A Guide

When your experienced employees turn 65, you might assume they'll retire and switch to Medicare. But many want to keep working—and staying on your group health plan. Understanding how Medicare coordination works isn't just about compliance; it's about retaining your most valuable team members without creating coverage headaches.

What Is Medicare Coordination?

Medicare coordination determines which insurance pays first when an employee has both your group health plan and Medicare. Think of it like figuring out who picks up the dinner check when two people reach for their wallets—there are rules about who goes first.

The key concept is "primary" versus "secondary" coverage. Primary insurance pays claims first, then secondary insurance may cover remaining costs. Getting this wrong can leave employees with unexpected bills or coverage gaps.

How Medicare Coordination Works

For businesses with 20 or more employees, your group health plan is primary and Medicare is secondary for working employees 65 and older. This means your plan pays claims first, just like it does for younger employees.

Here's a step-by-step example: Your 67-year-old office manager needs surgery. Your group plan processes the claim first and pays its portion. Then Medicare (as secondary) may cover some remaining costs, depending on what your plan didn't cover.

For smaller businesses (fewer than 20 employees), Medicare becomes primary and your group plan secondary. This flips the payment order—Medicare pays first, then your plan covers additional costs if applicable.

The rules change when employees stop working. Once they retire or reduce to part-time status, Medicare typically becomes primary regardless of company size.

Why Employers Maintain This Coverage

Offering coordinated coverage keeps your experienced employees working longer. These team members often have deep institutional knowledge, strong client relationships, and mentoring skills you can't easily replace.

Many older employees worry about healthcare costs and coverage gaps. When you handle Medicare coordination properly, you remove a major concern that might otherwise push valuable employees toward early retirement.

From a recruitment standpoint, smooth Medicare coordination can attract experienced professionals from competitors who haven't figured this out. It's a sophisticated benefit that demonstrates your company understands the needs of a multi-generational workforce.

What Employees Get From Proper Coordination

Employees avoid the stress of choosing between employer coverage and Medicare. Without proper coordination, they might drop your plan unnecessarily, losing access to their current doctors or facing higher costs.

When coordination works correctly, employees often get better overall coverage than Medicare alone. Your group plan might cover services Medicare doesn't, like enhanced prescription drug coverage or lower deductibles.

Employees also avoid penalties. If someone delays Medicare enrollment thinking your plan is enough, they could face late enrollment penalties when they eventually sign up. Proper coordination helps them understand exactly what Medicare parts they need and when.

Key Considerations for Implementation

Size matters for the primary/secondary determination, but it's based on your total number of employees, not just those enrolled in your health plan. Make sure you're counting correctly.

Communication is crucial. Employees approaching 65 need clear guidance about Medicare enrollment timing, what parts they need, and how coordination will work. Without this, they may make costly mistakes.

Consider the administrative burden. You'll need systems to track which employees have Medicare, coordinate benefits properly, and help employees understand their coverage. This isn't a set-it-and-forget-it situation.

Some employees may benefit from dropping your coverage and going Medicare-only, while others should keep both. Each situation requires individual analysis based on the employee's health needs, family situation, and financial circumstances.

How Benton Oakfield Simplifies Medicare Coordination

Medicare coordination rules are complex, and mistakes can be expensive for both you and your employees. At Benton Oakfield, we handle the details so you don't have to become a Medicare expert.

We work with your insurance carriers to ensure proper coordination setup, help employees understand their options before they turn 65, and provide ongoing support when questions arise. Our comprehensive benefits management includes Medicare coordination as part of our full-service approach.

Because we specialize in Long Island businesses, we understand the local landscape and can connect employees with Medicare resources specific to Nassau and Suffolk counties when needed.

Ready to ensure your Medicare coordination protects both your business and your employees? Contact our team to review your current setup and make sure you're handling this complex benefit correctly.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This guide is for educational purposes only. Please contact your Benton Oakfield representative to discuss how this applies to your specific situation.

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