(The opinions expressed here are those of the author, a columnist for Reuters.)
By Mark Miller
CHICAGO You're getting ready to retire, and need to navigate the transition from your employer's health insurance plan to Medicare. Where do you go for help? If you're guessing your human resources department, you may be guessing wrong.
Transitioning to Medicare from your employer's health insurance presents some complex challenges - and missteps can result in costly premium penalties and coverage gaps. But consumer experts who provide Medicare enrollment assistance say employers don't always provide the right answers.
"We've seen a real diminution of expertise among employers on this," says Joe Baker, president of the Medicare Rights Center, a non-profit consumer education and advocacy group.
Misinformation from employers is one of the most frequent sources of problems that prompt people to call the center's free national help line.
"We do see employers getting things wrong," says Paula Muschler, operations manager of the Allsup Medicare Advisor, a fee-based Medicare plan selection service. "Employers are experts on their own benefit packages, but Medicare isn't one of their benefits. People need to do their own research, and be their own advocates."
Enrollment at retirement age is hardly the only consumer problem facing Medicare beneficiaries. A new Medicare Rights Center report analyzing its inbound call center activity found that denial-of-coverage issues constitute the biggest problem (33 percent of all calls). But transition problems came in second - 23 percent of all calls. Low-income seniors facing problems with Medicare's affordability were third, at 21 percent.
The transition from work can present some thorny, confusing issues. Here are three pitfalls to avoid when moving from your employer's plan to Medicare:
- Missing the initial enrollment deadline. Medicare requires that you sign up in a seven-month window before and after your 65th birthday, unless you have employer coverage through active employment of your own or a spouse's elsewhere.
Employer coverage is primary if you're still actively working for acompany with more than 20 employees at age 65; in that circumstance, you want to at least enroll in Part A, since no premium is charged; depending on what your employer provides, you can decide about signing up for Part B or Part D (prescription drugs).
One caveat: People enrolled in a health savings account should proceed with caution because they cannot make HSA contributions once they are enrolled in Medicare.
If you work for an employer with 20 or fewer workers, Medicare must provide primary coverage when you turn 65.
Failing to sign up on time is costly. Monthly Part B premiums jump 10 percent - lifetime - for each full 12-month period that a senior could have had coverage but didn't sign up. That can add up: If you failed to enroll for five years, you'd ultimately face a 50 percent lifetime Part B penalty - 10 percent for each year. Penalties also are applied to Medicare Part D (prescription drugs) and Medicare Advantage plans (Part C) that include drug coverage.
You could also face a gap in coverage ranging from a couple months to a full year or more if you don't sign up on time, because you'll be missing key Medicare enrollment windows.
- Sticking with an employer's retiree coverage. Even if your former employer provides some level of retiree health benefit, it's important to sign up for Medicare once you reach age 65 to avoid penalties and coverage gaps. Employer-provided benefits then provide a secondary layer of coverage, and some employers provide a complementary drug benefit.
Laid-off workers who have COBRA health insurance also need to navigate carefully when they turn 65. Signing up for Medicare at that point is critical, because COBRA coverage isn't considered primary "creditable" coverage under Medicare's rules. COBRA coverage ends when you sign up for Medicare, although it's possible to keep COBRA coverage in some circumstances for services Medicare doesn't cover, such as dental care. Your spouse or dependents may still be able to have COBRA coverage even if you don't sign up for it.
- Letting spouses drive the plan. People who retire at age 65 or later but have a spouse or other dependents who are covered by their workplace plans shouldn't let that guide their plan. "That person needs to sign up for Medicare Parts A and B right away," says Muschler. "That way, your employer coverage can become secondary for you, and it can be primary for your dependents."
If you are enrolling after age 65 because you were covered on the job, be prepared to show proof. Although Medicare enrollment can be done online or on the phone, in this situation the best route is to make an appointment at a Social Security office, where you can bring documentation on your employer coverage. You'll also need to fill out the Centers for Medicare & Medicaid Services' FORM L564 (go.cms.gov/19Zwnaf).
Experts urge people close to retirement to get the planning process started early. A 2011 Allsup survey of 64-year-olds found that 44 percent had not yet begun planning for Medicare enrollment. A visit to the corporate human resources department isn't a bad start, but plan to double-check everything you hear either by contacting Medicare direct or by seeking advice from a third party expert adviser.
The Medicare Rights Center's service is free (1-800-333-4114). Free help also is available in every state through the State Health Insurance Assistance Program (SHIP), a network of non-profit Medicare counseling services (bit.ly/L6qfB9).
If you're willing to pay to get advice and help with paperwork, hire an independent, fee-based, counseling service such as Allsup (1-866-521-7655) or Goodcare (866-696-6543).
For more from Mark Miller, see link.reuters.com/qyk97s
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Editing by Douglas Royalty)