Transitioning from employer-provided health care to Medicare is a rite of passage in the American workforce. Every employee’s journey is different in terms of when they sign up for Medicare and when they choose to retire. These two events do not necessarily occur in tandem.
Once your employees turn 65, they can sign up for Medicare even if they’re still working.However, employees don’t have to sign up for Medicare at 65 if they’d rather stay on your group health benefits plan. No one working for a company with more than 20 employees can be required, forced, or incentivized to enroll in Medicare.
Confused? You — and your employees — are not alone, says Michael Mary, manager of direct pay sales. “People vary in their knowledge of Medicare. They tend to fall into three camps.
“I get calls from people after they have done their own research. They’re well-informed but want to make sure they’re not missing something. Others aren’t interested. They know that Medicare plans change every year and will make decisions when it’s time. The final group is people who have too much information and don’t know where to start.”
Your employees receive Medicare information from the government and health care marketers, as well as their family and friends. It’s a lot to process and truth can become distorted.
For example, there’s a prevailing myth that if a person doesn’t sign up for Medicare at age 65, they will incur cost penalties for life.
This is only true if the person did not have medical coverage between the time they turned 65 and the point at which they signed up for Medicare during their enrollment period. If they can prove they had insurance through an employer (or other plan), they will not incur a penalty.
Many soon-to-be retirees also feel confused about what to do with their health savings account (HSA). “Employees worry about what happens to the money accumulated in their HSAs when they transition to Medicare,” says Mary. “They don’t want to lose those dollars.”
Federal law dictates that employees who want to continue contributing to an HSA must defer Medicare. Otherwise, they need about a six-month lag time after their last HSA contribution before starting Medicare. “It’s a complex calculation,” Mary adds.
Mary recommends a one-year window as the “sweet spot” for preparing to transition from employer-provided care to Medicare. This is true whether employees want to sign up at age 65 or wait.
“The best thing that an employer can do is overcommunicate with Medicare-eligible workers,” advises Mary. “Bring in experts who can help employees understand the different parts of Medicare and how coverage works.”
Highmark offers Retiree Solutions Seminars to their employee group health insurance customers. Online and in-person workshops explain:
Employers should take every opportunity to give employees access to the right resources. “We want people to be knowledgeable,” says Mary. “Being prepared takes away some of the anxiety.”
Today’s consumers are digitally savvy and will do their own research, whether that is attending a webinar, looking at Social Security Administration and Medicare websites, and/or consulting with a financial advisor.
You can give your Medicare-eligible workers more confidence and greater peace of mind by preparing them for Medicare. Initiatives and strategies include:
Retirement is the ultimate offboarding experience for the employee and the employer. Ending your relationship on a positive note will pay dividends, with the new retiree serving as an ambassador for your employer brand and commitment to age diversity.
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Talk to your client manager today and we’ll help you find the right health plan for your company.
