Will being on my wife's insurance count as a Medigap policy?

A fellow caregiver asked...

I will sign up for Part B as of September (I will be 66) as I am fully covered by my wife's work insurance until then; she is retiring so I will need to enroll in Part B.

Question One: According to the "2011 Medicare and You" book, I have up to 6 months to sign up for a Medigap Policy without penalty or being turned down. However, I will continue to be covered by her insurance but secondarily to Medicare Part A and B. Will her health insurance count as a Medigap policy so that I can buy one without penalty in the future?? I hate to buy a Medigap policy if I do not have to do so, but do not want to end up being refused later on.

Question two: her policy will continue to cover my prescriptions until she reaches 65 (6 more years), and will count as "creditable prescription drug coverage." However, my wife heard on the radio that starting in 2012 I will have to buy Part D and use that even if I still have access to her drug coverage. Is this part of the Medicare law changing??

Expert Answer

Let's start with your question about your wife's employer-sponsored group health insurance being the equivalent of a Medigap supplemental health insurance policy. Most employer-sponsored or union-sponsored group health plans coordinate with Medicare for employees or spouses age 65 or older. As you've already learned, such retiree group health insurance (different from insurance through current work) usually becomes "secondary" to Medicare, meaning that Medicare pays its share of the bills first, and the retiree insurance pays only what Medicare does not pay (up to the limits of the retiree insurance's coverage). In that case, the retiree group insurance serves the same purpose as a separate Medigap supplemental insurance policy -- it fills the "gaps" in Medicare.

Because a retiree group health plan serves the same purpose as Medigap, Medicare allows a Medicare enrollee to stay on the retiree plan instead of buying a Medigap policy. And if that retiree coverage later ends, or is changed in such a way that it no longer qualifies as the equivalent of Medigap, you would then have a guaranteed right -- meaning, an insurance company could not turn you down because of your health -- to buy a Medigap plan without any cost penalty. This guaranteed right would not apply to all policies but only those under Plans A, B, C, F, K, or L that are sold in your state. If your retiree health insurance ends, you have 63 days (from the notice that coverage is ending) to purchase a Medigap policy under this guaranteed right.

Be aware, though, that this guaranteed right does not apply if you or your wife voluntarily drop your retiree coverage. So, if you keep the retiree coverage and do not buy a Medigap policy within the first six months after enrolling in Medicare, you run the risk that the retiree insurance eventually will become too expensive for you but you will not be able to drop it in favor of a Medigap policy. One of the ways to make the decision about whether to keep the retiree health insurance or to switch to Medigap is to comparison shop: Find out what various Medigap policies cost in your state, and compare that cost plus the extent of coverage they offer against the cost and coverage offered by the retiree insurance. If you want to get more detail from Medicare about Medigap and retiree insurance, take a look through Medicare's official online publication Choosing a Medigap Policy.

As far as your other question is concerned, about Medicare Part D and "creditable" employer-sponsored drug coverage, there is no basic change in the law for 2012. What your wife may have heard is someone worrying on the radio that a specific policy's coverage will no longer be creditable, meaning that its coverage would no longer exempt a policy-holder from the premium penalty imposed on people who do not enroll in a Part D or creditable equivalent drug plan but who later want to buy one. Group health insurers often change the extent of coverage they offer for prescription drugs, and some changes are significant enough to end a plan's certification by Medicare as a creditable equivalent plan. So, in the autumn of each year, you need to check with your retiree insurance plan to find out if it will continue to be a creditable plan for the following year, and if not, you must then enroll in a Medicare Part D plan or you will begin to incur the delayed-enrollment penalty, which takes the form of higher premiums if and when you do enroll in Part D.