By Guest Blogger, Ross Blair, CEO of PlanPrescriberMedicareMaze

As more people work past age 65, the eligibility age for Medicare, more people will need to navigate an increasingly complex web of employer and Medicare coverage. The decisions they make today could have costly, long-term implications.

A recent survey of caregivers conducted by eHealth, the parent company of PlanPrescriber.com, found that 80 percent of baby boomers expect to be working after their 65th birthday. Many will have health insurance through their employer. But this group must also consider how Medicare impacts their coverage and their choices. The same survey found that many baby boomers do not understand basic parts of how the Medicare program actually works. Certain parts of Medicare coverage are only guaranteed when you first become eligible for the program – even if you are working.

When you turn 65 and continue to work, you have some decisions to make about employer coverage vs. Medicare. To help you avoid costly mistakes, we have compiled a list of five things to keep in mind. The first three in this blog and the last two in next week’s blog.

1. Understand the basics of how Original Medicare (Part A and Part B) works and be aware of some cost-sharing gaps. Original Medicare is a great benefit that covers core services. For example, when you are admitted into a medical facility, like a hospital or skilled nursing facility, Medicare Part A typically pays for your care. If you see a doctor or specialist in an outpatient setting, like a doctor’s office or rehab center, Part B typically pays for your care.

But, Original Medicare benefits have some gaps. Neither Part A nor Part B will pay 100 percent of all your costs, and neither Part A nor Part B covers prescription drugs.

Parts A and B have their own separate deductibles, and Part A’s deductible typically resets 60 days after you are discharged from a hospital or skilled nursing facility. After you reach your Part B deductible, there is cost-sharing “coinsurance” wherein Medicare pays a percentage of every bill (typically 20 percent to 45 percent). And Parts A and B may have additional cost-sharing for other services or for care that extends past a set number of days.

These gaps are typically what prompt a person to stay with their employer-based coverage as long as possible, or to seek supplemental coverage.

2. How does your employer-based insurance work with Part A? Most of us are automatically enrolled in Medicare Part A when we turn 65, even if we have employer-based insurance. The way Part A works with your employer’s plan will depend on the size of the company where you work.

In most cases, if you work for a company with fewer than 20 employees, Medicare will become the primary payer of your hospitalization costs. Your employer’s insurer becomes the secondary payer and covers gaps in coverage. If you work for a larger company, the company’s insurer typically remains as the primary payer.

Most people become eligible for Part A (hospital insurance) at age 65, and most people do not pay a monthly premium for Part A. Even with employer-based coverage, Part A can help pay for costs not covered by your employer’s plan.

3. How does your employer-based insurance work with Part B?  Those with employer-based insurance can wait until they lose that insurance to enroll in Part B. Part B has a premium – most people pay a standard premium amount, which is $104.90 a month in 2013. If you have private insurance through another source, like an employer or union, there is no reason to pay that $104.90 until you have to.

But there are some caveats. You typically must enroll in Part B within eight months of losing the job that gave you health insurance or within eight months of losing the health insurance from that job, whichever comes first. Waiting longer than eight months creates a gap in your coverage, and any gap in coverage of Part B benefits can be penalized, permanently. It’s a good idea to talk to your employer health benefits administrator or a licensed agent who can clearly explain your options to you.

In next week’s blog, we’ll talk about the other two things to keep in mind when making decisions about employer coverage vs. Medicare.

Ross Blair is President and CEO of PlanPrescriber, Inc. (www.PlanPrescriber.com), a leading provider of comparison tools and educational materials for Medicare-related insurance products.

The Centers for Medicare and Medicaid Services (CMS) has neither reviewed nor endorsed the information provided by PlanPrescriber.

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