Ask ISM's Health Care Reform Specialist
Vol. 15 No. 1
Q. As I began preparing paperwork for the new school year, I noticed that our school has two employees who will be turning 65—and so become newly eligible for Medicare. Is there anything that the school needs to do?
A. The answer depends on the size of your school. If you have fewer than 20 employees on payroll, then Medicare is the primary payer for health insurance. Your employees must contact Social Security three months prior to turning 65. Social Security will then sign them up for Medicare Part A and Part B.
If your employees forget to sign up for Medicare at this time, health care will quickly become quite expensive. Your school's insurance will only pay the amount over what Medicare would have paid, leaving a gap they must pay for out-of-pocket.
If you have 20 or more employees, then Medicare pays after school’s group health insurance. The school will have to adhere to Medicare Secondary Payer Rules.
As the employer, your school cannot incentivize in any way for an employee to go on Medicare over the school’s insurance. Unlike at smaller schools, these employees are not required to sign up for Medicare to continue insurance coverage. They can choose either the school’s insurance and/or Medicare. (It is recommended that they sign up at least for Part A—hospitalization—as it generally does not cost the employee any money out of pocket to have Part A coverage.)
Note that your Medicare eligible employees (or their Medicare eligible dependents) covered under your school's health insurance plan receive a disclosure by October 15th of each year stating whether the coverage they have is "creditable coverage" or not. Medicare eligible employees who do not have creditable coverage face a penalty of 1% of the national standard premium for each month they do not have creditable coverage.
To help inform your Medicare eligible employees of their options, you can provide them with the resources offered by the Centers of Medicare and Medicaid Services.