How Medicare Coordinates with Employer or Union Coverage

How Medicare Coordinates with Employer or Union Coverage

If you’re approaching age 65 and still working—or covered through a spouse’s employer or union—you might be wondering how Medicare fits in. The coordination between Medicare and employer or union health plans can be confusing, but understanding it is key to avoiding gaps in coverage or unnecessary penalties.

1. The Basics: Who Pays First?

When you have both Medicare and employer or union health coverage, the two insurance sources decide who pays first (the “primary payer”) and who pays second (the “secondary payer”).

• If your employer has 20 or more employees: Your employer or union coverage pays first, and Medicare pays second.

• If your employer has fewer than 20 employees: Medicare typically pays first, and your employer coverage pays second.

This coordination ensures that your healthcare costs are properly covered—without double payments or denied claims.

2. Should You Enroll in Medicare While Working?

Many people delay Medicare Part B (medical insurance) while they’re still covered by an employer or union plan. This can make sense, as Part B comes with a monthly premium.

However, once you stop working—or lose employer coverage—you generally have 8 months to sign up for Part B without a late enrollment penalty. This is known as a Special Enrollment Period (SEP).

⚠️ Important: COBRA or retiree coverage doesn’t count as “active” employer coverage. If you rely solely on COBRA, you still need to enroll in Medicare to avoid penalties.

3. What About Medicare Part D (Prescription Drugs)?

If your employer or union plan includes prescription drug coverage, check whether it’s considered “creditable coverage” by Medicare standards. If it is, you can delay Medicare Part D enrollment without penalty.

Your HR department should send an annual notice confirming whether your drug plan is creditable. If it’s not, you’ll want to enroll in a Part D plan to avoid late fees later.

4. Retiree and Union Health Plans

Some unions and employers offer retiree coverage that works alongside Medicare. These plans often help cover costs that Medicare doesn’t—such as certain copayments or coinsurance.

However, benefits and costs can vary widely. Always compare the retiree plan’s coverage and premiums with what you’d pay for a Medigap (Medicare Supplement) or Medicare Advantage plan.

5. Key Takeaways

• Know who the primary and secondary payer is based on your employer’s size.

• Don’t delay Part B without confirming you have active, creditable coverage.

• Review your prescription drug coverage each year.

• Compare retiree coverage with Medicare options to ensure you’re not overpaying.

Final Tip:
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