Retiree Plans and Cobra are not Creditable Coverage for Medicare

Too many retirees are getting hit with late enrollment penalties for Medicare, finding themselves with medical bills that are not being paid and being talked into plans that, frankly, don’t work for them.  Once an employee becomes a retiree of a company, they are often handed over to a third-party benefits administrator who really doesn’t take the time to explain their rights and what they need to do and when they need to do it.

I have been on many calls with people who are either retiring, or are retired, from a company and then handed off to a third-party benefits administrator who then transfers us to one person, then to another, then to another, and then back to the original person. In the meantime, the retiree, my client, is feeling frustrated, angry, and scared, that they will end up being penalized for just having decided to take the step of retirement. This is insane and it happens repeatedly for people in mid-size, large, and often government related industries.

Did you know that COBRA and RETIREE Insurance are not forms of job-based health insurance coverage and, if you do not take the steps to enroll in Part B when first eligible, you will owe a late enrollment penalty?  Medicare requires that you show continuous creditable coverage if you and your spouse are covered by group-based health insurance and are staying with that coverage and not enrolling in Medicare Part B.  What many companies fail to explain well to their retirees is that group coverage only counts as creditable while they are working for that company.  Once they retire, they must enroll in Medicare Parts A and B to avoid late enrollment penalties.  Please click on this link (or copy and paste it) to read further: Medicare-Part-B-SEP.docx (medicarerights.org).

Late enrollment penalties for Part B can add up over time and can cause you to have much higher than expected medical costs.  It also can affect when you can enroll in Medicare and could cause penalties for prescription drug coverage as well.

Employers are relying more and more on third party benefits administrators to relay information to their retirees and those third party benefits people are handling benefits for many companies and unions and are not communicating well with the retirees.  Employees need to be demanding more of their company, their union, and their government to make sure that they are not left with high bills that they cannot afford because consistent and understandable information regarding their Medicare rights was not made available to them.