Case Flash: Retiree Insurance Pays Secondary to Medicare

Mrs. P first became eligible for Medicare when she turned 65 in September 2003. At the time, she was still working and received health insurance through her employer. Mrs. P decided not to enroll in Medicare Part B because she liked the coverage she was receiving from her employer and did not want to pay the extra monthly premium for more coverage that she felt she did not need at the time. In June 2008, Mrs. P retired from her job but continued receiving insurance from her former employer. Then, in September 2008, Mrs. P went to the doctor for her annual mammogram but her insurance denied payment for the service. When she called her retiree insurance benefits manager, Mrs. P was told that she needed to enroll in Medicare Part B before it would pay for her outpatient doctors’ services.

Mrs. P didn’t understand why this would be, so she called the Medicare Rights Center for help. The Medicare Rights Center hotline counselor explained to Mrs. P that when you retire, even though you may still be getting insurance through the same employer and even from the same insurance company, your coverage changes. If you are eligible for Medicare, retiree insurance is secondary and will pay only after Medicare has paid. If you do not take Medicare Part B, your retiree insurance will pay very little for doctors’ visits, sometimes nothing at all. In most cases, you should take both Medicare Parts A and B to ensure the most complete health coverage. (Before signing up for Medicare Part D drug coverage, find out whether or not your retiree coverage works with Part D. Not all retiree plans allow you to take Part D.)

Luckily, Mrs. P was still in her 8-month special enrollment period that began the month she retired. You can enroll in Medicare without penalty at any time while you have coverage from your (or your spouse’s) current employer and for eight months after you lose your coverage or you (or your spouse) stop working, whichever comes first. The counselor warned that she should act fast; if she missed this opportunity she would not be able to enroll until the General Enrollment Period, which runs from January 1 to March 31 each year, with coverage starting July 1. She would also have to pay a late-enrollment premium penalty equal to 10 percent of the Part B premium for every full 12-month period she did not have Medicare after she was first eligible and did not have coverage from a current employer.

The hotline counselor advised Mrs. P to call Social Security right away to enroll in Medicare Part B, which she did. Mrs. P also told her doctor that she was enrolling in Medicare to cover her services. When her coverage began, Mrs. P asked her doctor to bill her insurance again for her mammography services—but this time to bill Medicare. Medicare covered 80 percent of the approved cost of Mrs. P’s mammogram, and, this time, Mrs. P’s retiree insurance covered the remainder of the cost after Medicare paid.

-From: “ Retiree Insurance Pays Secondary to Medicare ” MEDICARE WATCH, a biweekly electronic newsletter of the Medicare Rights Center, Vol. 12 , No. 13: June 30, 2009.

 

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