You may have other insurance if you become eligible for Medicare because of a disability. Here, we review how employer-sponsored insurance coordinates with Medicare, rules and options for delaying Medicare Parts B and D, how to avoid premium penalties, COBRA insurance and individual health insurance.
You should evaluate the benefits and costs of all your options to decide which works best for you. Contact your local Health Insurance Counseling & Advocacy Program (HICAP) office for more information.
Topics on this page:
- Employer-Sponsored Insurance
- Employer-Sponsored Insurance & Medicare Part B
- Other Insurance & Medicare Part D
- Individual Health Insurance
1. Employer-Sponsored Insurance
If you are younger than age 65 and on Medicare, you may have additional health benefits through your own active employment or that of a spouse or parent. If you have end-stage renal disease (ESRD) and continue to work, the rules are different. For more information, see End-Stage Renal Disease & Employer-Sponsored Insurance.
Companies with 100 or More Employees
Companies with 100 or more employees that offer insurance must provide the same health insurance options to employees who have Medicare because of a disability as they do to other employees. The employer plan cannot reduce coverage or charge a higher premium for people with disabilities, including spouses and dependents of employees.
Companies with Less than 100 Employees
Companies with less than 100 employees that offer insurance are not required to provide the same health insurance options to employees who have Medicare because of a disability as they do to other employees. However, they may offer these employees, their spouses and dependents coverage that supplements Medicare.
If you have end-stage renal disease (ESRD), you may continue to work and have coverage through your employer. If you have Medicare because of ESRD, the employer plan must be the primary payer during a 30-month coordination of benefits (COB) period, regardless of the group size or the individual’s employment status. This applies to COBRA plans, as well. For more information, see our COBRA section and our fact sheet available via subscription, Medicare and People with End-Stage Renal Disease (ESRD).
2. Employer-Sponsored Insurance & Medicare Part B
Medicare Part B covers many of the same services that may be covered by an employer group health plan. Since enrollment in Part B is voluntary and requires a monthly premium, you may want to delay enrollment if you have coverage from an employer that provides the same or better benefits.
Note: As mentioned above, if your company has less than 100 employees and you qualify for Medicare, your employer is not required to offer you the same benefits as other employees without disabilities. In addition, the company is not required to offer primary or even secondary coverage. If this is the case, you should enroll in Medicare Part B.
Under federal law, you have the right to delay enrollment in Part B and enroll later without penalty if your employer-sponsored primary coverage ends. This protection applies only to employer-sponsored primary coverage due to your, your spouse’s or a parent’s active employment. However, there are very specific rules for delaying Part B enrollment. If you do not follow these rules, you may be charged a premium penalty for late enrollment, and both your enrollment and your coverage may be delayed for many months. For more information, see Delaying Enrollment in Parts B & D.
3. Other Insurance & Medicare Part D
If you have other health insurance with drug coverage that is creditable (as good as or better than Medicare Part D), you do not need to enroll in a Part D plan.
If you don’t have drug benefits under other insurance or those benefits are not creditable, you may want to enroll in a Part D plan. If your benefits are not creditable and you do not enroll when you are first eligible, you will be charged 1% of the average national premium for Part D plans for each month you delayed enrolling in a plan. For more information, see our Prescription Drugs (Medicare Part D) section.
If you lose employer-sponsored coverage, you may be covered by the Consolidated Omnibus Budget Reconciliation Act of 1986, better known as COBRA. However, COBRA benefits only last for 18 months (or longer under certain circumstances).
If you are on Medicare before you become eligible for COBRA, you can have both COBRA and Medicare coverage. However, if you are already on COBRA when you become eligible for Medicare, your COBRA benefits will generally end when your Medicare benefits begin.
If you have both COBRA and Medicare, and your COBRA plan offers prescription drug benefits, you will need to decide whether to enroll in a Medicare Part D plan. Prescription drug benefits provided by former employer plans under COBRA are often better than those offered in Part D plans. If your benefits are creditable (as good as or better than Part D), you may delay enrollment in a Part D plan and you will not be charged the late enrollment penalty if you enroll later. If your coverage is not creditable, you should consider enrolling in a Part D plan within 63 days of either becoming eligible or losing previous benefits to avoid:
- A Part D premium penalty
- A delay in enrollment
- A delay in receiving drug benefits
Contact your employer or COBRA carrier to find out how your drug benefits compare with Medicare’s.
If you accept COBRA, Medicare will be the primary payer of benefits, unless you have end-stage renal disease (ESRD). To avoid paying expenses that Medicare Part B covers, many employers and COBRA carriers require that you enroll in Part B if you don’t already have it when you first become eligible for COBRA. For more information, see our section on COBRA.
5. Individual Health Insurance
If you become eligible for Medicare due to a disability while you have individual health insurance, your insurance company cannot cancel your coverage. Some people choose to keep their individual insurance because it offers:
- Better coverage for prescription drugs than a Medicare Part D plan
- Benefits Medicare doesn’t cover
- More extensive coverage than Medicare for certain benefits
Before you make a decision to keep or terminate this type of coverage, contact your local Health Insurance Counseling & Advocacy Program (HICAP) office for more information about your rights to coverage, and coordination of benefits between individual insurance and Medicare.