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Facts and Updates
Listed below are important facts and updates. If you have an update or fact you would like added, please contact us.
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Medicare
Here are some important points to consider when a Medicare eligible employee asks about opting out of a group plan and applying for a Medicare Supplement, Medicare Advantage, and/or Medicare Part D plan:
• The employee must make this decision
• The Medicare Secondary Payer rules state an employer cannot encourage or make it more advantageous for an individual to leave the group for an individual policy
• Medicare is the primary insurance coverage for groups with 2-19 employees. The group coverage is primary for companies with 20+ employees.
• The employer contribution, drug benefit, and plan design will be the largest factors in determining what makes economical sense to the employee. In several scenarios, opting out of the group plan will provide greater benefits at a cheaper cost to the employee.
• The removal of a Medicare eligible individual from a small group plan will change the demographics of the group and should result in a lower premium. Participation requirements also need to be kept in mind.
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COBRA Continuation Coverage Assistance Extended
The American Recovery and Reinvestment Act of 2009 (ARRA) provides for premium reductions and additional election opportunities for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA.
• Eligible individuals pay only 35% of their COBRA premiums and the remaining 65% is reimbursed to the coverage provider through a tax credit
• The premium reduction applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to nine months for those eligible for COBRA during the period beginning September 1, 2008 and ending December 31, 2009 due to an involuntary termination of employment that occurred during that period
UPDATE: On Decemeber 19th, 2009, a bill was passed extending federal COBRA premium subsidies for the unemployed by an additional 6 months. The change applies to those who are involuntarily terminated through February 28, 2010.
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