One of the hottest topics in the country is Medicare, the federal health
plan that pays for medical services for qualified seniors, disabled persons and
those with end-state renal disease.
The Medicare Prescription Drug, Improvement and Modernization Act of 2003
made a number of changes to the
Medicare program, including the new
optional Medicare prescription drug benefit (Part D), which became effective Jan. 1,
2006. Employers that provide health benefits to their retirees have options in light of
the new Part D benefit.
Companies that have Medicare-eligible
employees and retirees should be aware of
these and other new developments, says
Nancy Pokorny, vice president of business
development at the Council of Smaller
Enterprises (COSE). Companies either
need to stay on top of the latest news or
turn to a knowledgeable third party to help
walk them through the basics.
Smart Business spoke with Pokorny
about how companies can effectively
work with their employees and retirees to
ensure that they receive the maximum
benefits from Medicare.
An employer receives a letter saying that
someone in the company will be turning 65.
What does it need to know about Medicare?
If you have fewer than 20 employees on
payroll, Medicare is primary and your
group health plan is secondary. This
allows Medicare to pay first and then the
group health plan will pay additional benefits to bring the subscriber’s coverage
equal to those for the rest of the group. If,
on the other hand, you have 20 or more
employees, then the group health plan
pays first, and Medicare pays second.
What does Medicare entail?
Medicare has two main parts. Part A
pays for inpatient hospital care, skilled
nursing facilities, and some hospice and
home health care services. Provided an
employee or spouse has 40 or more quarters of Medicare-covered employment,
there is no cost associated with Part A.
Part B covers Medicare eligible physician services, diagnostic tests, X-rays, lab services, outpatient hospital care, physical
therapy, ambulance services and medical
equipment. It costs $96.40 per month in
2008, provided your current income does
not exceed $82,000 (single) or $164,000
(married couple).
Will employees automatically be enrolled
into Medicare or do they need to sign up?
Your employees will need to sign up for
Medicare. They should contact their local
Social Security office three months before
turning age 65 to sign up for Medicare.
Should employees sign up for Medicare Part
A and B if they are still working?
It is suggested that employees who are
turning 65 and will continue to work
enroll in Medicare Part A and Part B. If
you have less than 20 employees, enrollment will help minimize your employees’
out-of-pocket expenses.
What about Medicare Part D?
Medicare Part D is a prescription drug
benefit plan available to all individuals
turning 65 years of age. Medicare Part D
prescription coverage offers employees
many options and is available through privately held insurance companies. Whether
an employee should sign up for Part D
depends on what sort of drug benefit is
available through the company’s health
insurance plan. As an employer, you are
responsible for notifying your employees
as to whether or not the plan elected is
considered creditable by government standards associated with the Medicare Part D
plan. Visit cms.hhs.gov/creditablecoverage
for information on creditable plans. If an
employee needs to elect a Part D plan,
Medicare’s Web site (www.medicare.gov)
provides an excellent resource that compares drug plans.
The Web site MedicareRights.org states:
‘If you have drug coverage now that is at
least as good as or better than Medicare’s
basic drug benefit (creditable) you probably should keep it. You can join a
Medicare private drug plan later without
penalty if you need it. You should have
received a letter from the company that
provides your drug benefits — such as an
insurance company, employer or state
program — telling you whether your coverage is as good or better.’
How does an employee coordinate both
Medicare and his or her group health plan to
pay benefits?
When both programs cover an employee, it is very important to notify the health
insurance company and providers (physicians and hospitals) to ensure proper
coordination of primary and secondary
payments. This will help to prevent claim
payment delays and rejections.
NANCY POKORNY is the vice president of business development at the Council of Smaller Enterprises (COSE), one of Ohio’s largest
small business support organizations. Reach her at [email protected] or (216) 592-2309. Composed of more than 17,000 members,
COSE strives to help small businesses grow and maintain their independence. COSE has a long history of fighting for the rights of all
small business owners, whether it’s through group purchasing programs for health care powered by Medical Mutual of Ohio, workers’
compensation or energy, advocating for specific changes in legislation or regulation, or providing a forum and resource for small businesses to connect with and learn from each other.