Q. Can we make it mandatory for employees to enroll in Medicare upon turning age 65 even if they don’t plan on retiring and continue using the group medical plan? If so, how must this be communicated to employees approaching Medicare eligibility?
A. Because the retirement age tends to be increasing, employers are finding they’re employing more Medicare-eligible employees, who become eligible at age 65. Whether you can require employees to enroll in Medicare at 65 depends on how many employees you have:
- If you have (1) 20 or more employees or (2) fewer than 20 employees but are in a multiemployer group plan (and are therefore considered a “large employer”), you can’t mandate enrollment in Medicare at 65.
- If you have fewer than 20 employees and a group plan for just your business (and are therefore a “small employer”), you can require your workers to enroll in Medicare at 65.
That’s the case even if the employee isn’t retiring and intends to continue to participate in your group medical plan.
Large employers. If you are a larger employer, you can’t treat older workers (age 65 and above) differently than younger workers. Accordingly, you’re required to provide medical coverage to the older workers on the same terms as the younger employees.
If an employee elects to enroll in Medicare in addition to your group policy, then your health plan pays first. Medicare fills in as a secondary coverage. As mentioned above, you can’t require workers to enroll in Medicare at 65—indeed, you can’t even offer incentives to encourage their enrollment.
In your case, the employees can postpone enrolling in Medicare until their employment ends or your coverage stops. There’s one limited exception to the rule: If employees turning 65 have end-stage renal disease (e.g., permanent kidney failure), they can be required to get Medicare even if they work for a large employer.
Small employers. If you are a small employer, then Medicare pays before your group health plan covers anything. Plus, you can require enrollment for workers age 65 and older. Employees would need to sign up for Medicare Parts A and B. The failure of your Medicare-eligible employee to sign up for Medicare could mean a loss of coverage and potential penalties (including late-enrollment fines).
It’s advisable to provide written notice of the fact that you’ve opted to make Medicare mandatory. The communication should apprise employees of the risks of failing to sign up for Medicare, including potential loss of coverage and penalties that could be assessed.
Moreover, you need to provide a disclosure about your prescription drug coverage so that Medicare-eligible employees can consider whether to sign up for Medicare Part D. If you sponsor a group health plan that grants prescription drug coverage to Medicare-eligible employees, you must provide a disclosure advising them whether your offered prescription drug coverage for the upcoming year will pay, on average, as much as or more than Medicare Part D for prescription drugs.
The deadline for making the disclosure is October 15 of each year. That is so employees have the information at the beginning of the Part D enrollment period. While this deadline has passed, it is something to keep in mind ahead of next year’s deadline.