Sunday, October 4, 2015

IBM Medicare OneExchange - Over 65 COBRA coverage

I recently had a conversation with a Medicare counselor and realized, once again, how difficult it is to understand Medicare rules as relates to employees who are currently working, are over 65 and think they about to be let go from the company (aka part of a "resource action").  Even the counselor got it wrong.
As long as you continue to work for IBM and it has more than 100 employees (which might become an issue if resource actions continue), your primary health insurance coverage is provided by IBM Group Health Insurance (GHI).  When you turn 65, I recommend you call Social Security and enroll in Medicare part A (hospitalization insurance) because it is "free". You can do this any time.  Medicare part A insurance will act as secondary insurance to IBM GHI and likely offer no benefit.  However, there may be times when it provides extra coverage.  For example, it might cover an "in-patient" procedure where your GHI might only cover the procedure as "out-patient".  It also is good to do it because you'll be "in the system" and it will be easier to enroll in part B when you are terminated or decide to stop working. There is rarely any benefit to enrolling in part B and paying the part B monthly fee.  Enroll in part B before you stop working if you know for sure you are going to be terminated and you want to guarantee there are no hiccups within various enrollment systems when you are no longer working.
The day you stop working is the day your Medicare part B and part D insurance must be active (UNLESS your spouse is still working and can add you to their insurance) to have continuous coverage. At that point, all insurance companies consider Medicare to be your primary insurance - even if you did not enroll.  This can be really confusing because often, as part of your severance package, you will be offered a COBRA.  When you stop working and you are Medicare eligible, COBRA is SECONDARY INSURANCE.  In fact, it is very expensive secondary insurance. Unfortunately, insurance companies don't bother to look at your age and tell you that.  As long as you stay well, the insurance company will likely cover your doctor services as if it is primary insurance.
IF YOU GET SICK and the bills start to pile, the insurance company will typically review your file, look at your age and then send you a letter telling you - WHOOPS - they are a secondary policy since you are Medicare eligible.  Sometimes they even claw back payments to doctors and hospitals that they have made. When people complained, they sometimes return paid premiums rather than agree to not do a claw back.  It can be a financial nightmare.  Unfortunately, there is nothing illegal about selling you a COBRA plan because, as I said, it is secondary insurance.
There is another awful aspect to the COBRA nightmare for people over 65.  The day you stop working you'll enter a Medicare enrollment period called a Special Enrollment Period.  You have 8 months to enroll in Medicare and not be slapped with a penalty when you do enroll.  If you have a COBRA that is an 18 month COBRA and you don't know the rules, you could face a 10-20% part B premium penalty FOR LIFE depending on the time frame of that 18 months.  More importantly, depending on the time frame, you might have to wait until January of the next year to enroll in part B and your coverage will not begin until July 1st of that year.  
Sometimes people decide just to pay for part B when they turn 65 rather than have to deal with any of these problems.  That is quite a bit of overkill.  I recommend enrolling in part A, and the day you are told you "might be terminated" call Social Security and enroll in part B.  The day you are terminated, call OneExchange and buy a part D, medigap or Medicare Advantage plan from them so you can get your IBM health benefit subsidy.


No comments:

Post a Comment