Other health insurance, Medicare and people with disabilities

Employer-sponsored health insurance

People on Medicare who are younger than 65 may have additional health benefits through the active employment of a spouse or parent. If you have ESRD and continue to work, see “End-stage renal disease & employer-sponsored health insurance“ below.

Employers with 100 or more employees

Employers with 100 or more employees that offer insurance to their employees must offer the same health insurance options to employees who have Medicare because of a disability. The plan cannot reduce coverage or charge a higher premium. This includes health insurance offered by the employer to an employee's spouse and dependents.
The employer group health plan is the primary payer of medical claims covered by the plan. Medicare is the secondary payer for services covered by both the employer group plan and Medicare.

Employers with fewer than 100 employees

Employers of smaller companies — under 100 employees — that offer insurance to their employees are not required to offer the same health insurance options to their employees with disabilities. They may, however, offer coverage that supplements Medicare.

End-stage renal disease & employer-sponsored health insurance

People with end-stage renal disease (ESRD) may continue to work and have coverage through their own employment. When a person has Medicare because of ESRD, the employer plan, including COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986), must be the primary payer of benefits during a 30-month coordination period, regardless of the size of the group or the individual's employment status. For more info about COBRA, see below.

Employer-sponsored or other health insurance & Medicare Part B

Medicare Part B covers many of the same medical services that may be covered by an employer group health plan. Since enrollment in Medicare Part B is voluntary and you must pay a monthly premium if you choose to enroll, you may want to delay enrollment in Medicare Part B if you have coverage from an employer. Thus, people with disabilities younger than 65 who are covered by their or their spouse's employer group health plan may want to delay Medicare enrollment to avoid paying the Part B premium if their employer plan provides the same or better benefits.

You have the right under federal law to delay enrollment in Part B and enroll later without penalty if your employer-sponsored primary coverage ends. However, there are very specific rules for delaying enrollment in Part B and picking it up later. If you do not follow these rules carefully, you may be assessed a premium penalty for late enrollment, and both your enrollment and your coverage may be delayed for many months. See our section Health insurance while working for more information.

Employer-sponsored or other health insurance & Medicare Part D

If you have other health insurance with drug coverage that is as good as or better than Medicare Part D, you do not need to enroll in a Medicare Part D plan.

If you don’t have drug benefits under your other coverage, or those benefits are not as good as Medicare Part D, you may want to sign up for a Medicare Part D plan. If your benefits are not as good as Medicare’s and you do not sign up when you are first eligible, you may be charged a premium penalty if you enroll later. The penalty is 1% of the national average premium for each month you were eligible for Part D but were not enrolled. For more information on Part D and information on enrollment, see the Medicare Prescription Drug Coverage section.

COBRA

If you lose employer-sponsored coverage, you may be covered by the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA). People who were on Medicare before they were entitled to COBRA can have COBRA coverage along with Medicare. However, if you are already on COBRA when you become eligible for Medicare, your COBRA benefits will usually end at that time.

If you can and choose to have both COBRA and Medicare, and your plan under COBRA has prescription drug benefits, you may need to decide whether to enroll in a Medicare Part D plan. Prescription drug benefits provided by former employers’ plans under COBRA are often better than the benefits offered under Medicare Part D. If they are as good as or better than Medicare Part D, you may delay signing up for a Medicare Part D plan and not be charged the late enrollment penalty if you sign up later. If it is not as good as Medicare Part D, you should consider signing up for a Medicare Part D plan. You should also do so within 63 days of being eligible or within 63 of losing previous benefits to avoid a Part D premium penalty and a delay in enrolling and receiving drug benefits. Contact your employer or COBRA carrier to find out how your drug benefits compare with Medicare’s.

If you are allowed to have both COBRA and Medicare, COBRA is one way to supplement Medicare, but not the only way. COBRA lasts only for 18 months (or longer under certain circumstances.) Besides COBRA, your other options include joining a Medicare Advantage plan or purchasing a Medigap policy to fill in the gaps of Original Medicare. You can choose from policies A, B, C, F (including high deductible F), K or L from any company that sells them. You have these rights when your employer coverage ends or when you exhaust your COBRA benefits. You will need to evaluate the benefits and costs of all your options to decide which of them works best for you. Contact your local Heath Insurance Counseling and Advocacy Program (HICAP) for more information about Medicare Advantage and Medigap plans.

If you decide to take COBRA, Medicare will be the primary payer of your health benefits, except when you have end-stage renal disease (ESRD) (see above). To avoid paying expenses that Medicare Part B would cover, many employers and COBRA carriers require people to enroll in Medicare Part B if they don't already have Part B when they first become eligible for COBRA.

Individual health insurance

If you become eligible for Medicare due to a disability while you have individual health insurance, the insurance company cannot cancel your coverage. (Individual health insurance is coverage you bought from an insurance company; you pay the premium from your own funds.) Some people decide to keep their individual insurance because it offers better coverage and sometimes has benefits not covered by Medicare. For example, the prescription drug benefit may have better coverage than Medicare Part D or cover drugs not covered by Medicare Part D.

Before you make a decision to keep or terminate this type of coverage, contact your local Heath Insurance Counseling and Advocacy Program (HICAP) for more information about your rights to coverage and coordination of benefits between your individual coverage and Medicare.

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Page updated April 29, 2008