Ready to Retire? When You Should Leave Your Spouse’s Employer Health Plan.

“I’m about to retire but my spouse is still working, and I have coverage through his/her employer. What do I do now; should I enroll in Medicare?”

This is a common question I hear almost every day — and it can be a challenging one to figure out. My simple answer is: it depends. What it depends on is the number of employees at your spouse’s workplace.

If your spouse’s employer has fewer than 20 employees, you should sign up for Medicare Part A (hospital insurance) and Part B (doctor/medical insurance) when you are first eligible. In this case, Medicare (primary payer) will pay eligible claims first before your spouse’s coverage (secondary payer) pays.

For example, say I have coverage through my spouse’s insurance, I am about to retire, and my spouse’s employer has less than 20 employees. I would enroll in Medicare Part A and Part B when I am first eligible, so I do not receive a late enrollment penalty. When I see my doctors, I would give them my red, white, and blue Medicare card as well as the insurance card through my spouse’s employer. When my doctor submits the claim, they would submit it to Medicare first and receive payment. My doctor then submits the remaining balance to my spouse’s insurance. Keep in mind that even though the claim was submitted to both insurance types, I may still be responsible for a copayment, coinsurance, and/or deductible depending on my spouse’s plan’s benefit design.

If your spouse’s employer has 20 or more employees, your spouse will need to speak to his/her benefits administrator, insurer, or plan provider to determine if the coverage is considered a Group Health Plan as defined by the IRS. If the plan does meet IRS standards, you may be able to delay enrolling in Part A and Part B and will not receive a late enrollment penalty. In this scenario you may keep your current health insurance through your spouse’s employer and the plan would pay for your eligible claims.

Now, say two years down the line your spouse decides to join you in retirement, what should you do? When their employer’s coverage expires, you have three options:

1. You may be eligible to enroll in COBRA, but the amount you pay monthly for your health insurance may be costly and may not be the best option.
2. If the COBRA costs are too high, you may enroll in Medicare Part A and B. You have eight months following the termination of your spouse’s employer-sponsored health insurance to enroll.
3. You may purchase a Medicare Advantage plan or Medicare Supplement (Medigap) plan and, if necessary, a Medicare Part D plan.

Want to learn more? Attend one of our Medicare Basics seminars to speak to a licensed agent to learn more about Medicare and how to get started. We specialize in eliminating the confusion.

This article was originally published on LinkedIn.

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Website last updated: 7/26/2018

Bob McFillin

Bob McFillin is the Director of Medicare Broker Sales, Field Sales, Group Medicare Sales and Medicare Private Exchanges for Independence Blue Cross (Independence). He has held many senior-level positions cultivating, developing, managing, and leading profitable sales programs for the past 13 years. In his current role, Bob and his team forge new opportunities each day within the Independence five-county southeastern PA area.