By Danielle Capilla
Chief Com­pli­ance Offi­cer at Unit­ed Ben­e­fit Advisors

medicareUnder fed­er­al reg­u­la­tions, Medicare is a sec­ondary pay­er for many indi­vid­u­als who have an employ­er group health plan avail­able to them, either as an employ­ee or the depen­dent spouse or child of the employ­ee. Gen­er­al­ly the Medicare Sec­ondary Pay­er rules pro­hib­it employ­ers with more than 20 employ­ees from in any way incen­tiviz­ing an active employ­ee age 65 or old­er to elect Medicare instead of the group health plan, which includes offer­ing a finan­cial incen­tive. Although pre­mi­um pay­ment arrange­ment rules under the Patient Pro­tec­tion and Afford­able Care Act (PPACA) pro­vide a lim­it­ed cir­cum­stance for reim­burs­ing Medicare pre­mi­ums, this option is not fea­si­ble for employ­ers with more than 20 employ­ees due to Medicare Sec­ondary Pay­er rules.

Q1. Who is affect­ed by Medicare Sec­ondary Pay­er rules?

A1. Medicare-eli­gi­ble indi­vid­u­als age 65 or over whose employ­er group health plan is based on the cur­rent employ­ment of the indi­vid­ual or spouse, by an employ­er that employs 20 or more employ­ees, are pro­tect­ed by the Medicare Sec­ondary Pay­er rules unless the active employ­ee elects Medicare. Health insur­ance plans for retirees, or spous­es of retirees, are not affect­ed because retire­ment is not “cur­rent employ­ment.” Indi­vid­u­als who are eli­gi­ble for Medicare based on dis­abil­i­ty or end-stage renal dis­ease (ESRD) are also affected.

Q2. What are employ­ers with 20 or more employ­ees required to offer their Medicare-eli­gi­ble old­er employees?

A2. Employ­ers are required to offer employ­ees age 65 or over the same group health plan cov­er­age offered to younger work­ers. Work­ers with Medicare-eli­gi­ble spous­es must be offered the same spousal ben­e­fits as employ­ees with spous­es that are not Medicare-eligible.

Q3. Are employ­ees who are Medicare eli­gi­ble required to elect their group health cov­er­age or Medicare?

A3. Employ­ees can elect, at their dis­cre­tion, Medicare or the group health plan as their pri­ma­ry health insur­er. Employ­ees that elect their group health plan will then have sec­ondary Medicare cov­er­age if they enroll in Medicare. Their employ­er can­not induce them or pro­vide incen­tives to select Medicare as their pri­ma­ry coverage.

Q4. If an employ­ee elects Medicare as his or her pri­ma­ry insur­er, may the employ­ee enroll in a group health plan for sec­ondary coverage?

A4. No, this is prohibited.

Q5. How does Medicare know if an indi­vid­ual has the option of enrolling in a group health plan through their employer?

A5. The Cen­ters for Medicare and Med­ic­aid (CMS) mails ques­tion­naires to indi­vid­u­als before they become enti­tled to ben­e­fits under Medicare Part A or enroll in Medicare Part B to deter­mine if they are eli­gi­ble for pri­ma­ry cov­er­age under anoth­er plan.

For more of the top ques­tions and answers about report­ing require­ments, deter­min­ing if you have 20 employ­ees for Medicare Sec­ondary Pay­er pur­pos­es, whether you can reim­burse Medicare pre­mi­ums, and penal­ties for rule vio­la­tions, view UBA’s PPACA Advi­sor, “What You Need To Know About Medicare Sec­ondary Pay­er Rules”.

Read More …