Balancing Medicare with Company Health Benefits

By Ryan Lowry, International Public Management Association for Human Resources

For those who are covered by an employer-provided health benefit and are eligible for Medicare there are three options. The first of these options, according to the Bureau of National Affairs (BNA) HR Library's "Employer Health Care Options," is a coordination of benefits-type method. "Since employer-sponsored coverage usually is primary for Medicare-eligible individuals, employers cannot coordinate coverage by limiting benefits to services that Medicare does not cover. Any limits on employer coverage must apply to all workers, regardless of Medicare eligibility or coverage. However, costs not covered by the employer's plan can be submitted to Medicare. Therefore, some employees can be covered under their employer plan and still receive Medicare benefits."

The "carve-out" option operates similarly to Medicare integration, in which employers are allowed to offset their benefits against Medicare coverage. During integration, Medicare payments are made first and then the employer pays its share of the benefits. Carve-outs, as opposed to integration, use the full amount of the claim to determine the retirees' contribution. Medicare then pays its share, with the employer paying the balance

Under a "Medicare Supplement" method of integration, retirees continue to pay deductibles and make co-payments. The employer plan only provides benefits not covered by Medicare. Costs are not split between the employer and Medicare because the plans cover different benefits.

Medicare, however, might not be available to all retirees. State and local municipalities along with a good number of companies often offer early retirement to employees who have worked a minimum number of years and are 55 to 60. Many government agencies allow retirement before age 65 as long as certain criteria are met: usually a minimum of 20 years of service for the particular agency, along with a minimum age of 50 or 55. Once the criteria are met, the retiree continues to receive the benefits, just as any other employee.

Read the full article on Retiree Health Benefits http://www.ipma-hr.org/files/IPMANews03-06FINAL.pdf]