If I have a employer group health plan, do I need to sign up for Medicare Part B?
I lost my job when my company merged with another company. The merger triggered a set of Change-in-Control provisions that provided special benefits for employees who lost their jobs because of the merger. These benefits included a company-paid extension of my medical coverage under the company group health plan for 18 months. The level of coverage is the same as when I was an employee and the company's medical insurance remains my primary medical insurance. I am over 65 years old. Can I wait until the 18 months of extended medical coverage is over before I apply for Medicare B, or do I have to apply within 7 months of my job termination, as some Medicare brochures seem to indicate. If I am still covered by my company's group health plan, I don't see why I have to apply for Medicare B now, rather than 18 months later.
The answer depends on whether Medicare considers this special Change-in-Control employer-sponsored health coverage to be based on current employment or to be a kind of retirement plan. That's because of the wording of the Medicare rule concerning late enrollment in Part B. If you don’t sign up for Part B when you're first eligible, the cost (currently $96.40 per month for most people) goes up 10% -- permanently -- for each year that you could have had Part B but didn’t sign up for it. But, if you delay taking Part B because you or your spouse have group health insurance based on current employment, you don't have to sign up for Part B and don't pay the higher premium when you do. This does not apply, however, to health coverage provided as part of a retirement package.
If you have group health plan coverage based on current employment, you can sign up for Part B any time while you have the group health plan coverage, or during the 8-month period that begins the month the employment ends, or the group health plan coverage ends, whichever happens first. You can read more about these rules in the pamphlet Medicare & You 2008.
Beware! If you are signed up with a retiree health plan through your employer, and you waive Medicare Part B, the retiree plan may still process your claims as if you have part B anyway leaving you with a gap in insurance! Ex. Medicare pays office visits 80% after a deductible. If you waive part B your retiree health plan may process your claim as if medicare had paid that 80% even though you don't really have Part B coverage. In the meantime as a penalty for waiving the Part B medicare may make you wait to sign up for coverage and apply a penalty by adding an additional 10% charge for each year you were eligible for part B coverage but declined it!