Dropping Part B

[TimW952842]

I recently signed up for Medicare but the premiums are killing me. I’m still working and my employer (under 20 employees) fully pays for my healthcare. I’ve researched this for months but it’s very confusing. Is there any way to drop Part B, or get some alternative (cheaper) coverage?

[GailL1]

Read This

Medicare.gov - Working Past 65 

So talk to your employer.  

If you do find out that you can drop Part B until you lose the employer coverage, then there a specific way you have to do the dropping of part B via Social Security - because they are the government agency where one signs up or drops (in your case) Medicare Part B until a later date.

Medicare.gov - How To Drop Medicare coverage 

Part A doesn’t have a premium for most everybody if you have worked long enough ( Part A is where your [and employer match] payroll taxes go.

Once you lose your employer coverage, you will have to sign back up for Part B pronto or pay s life long premium penalty

Some employer health plans (smaller employers) do require that you have both Parts A & B so just make sure.  The problem is that some smaller employer plans aren’t what Medicare considers full coverage - for Part B AND also for Part D, the prescription drug coverage for Medicare.  .

[TimW952842]

Unfortunately I have already been through this with my employer. They have nothing to offer. I was hoping someone here might have information on a viable and cheaper alternative to Part B. Barring that, maybe someone here can explain why Medicare treats employees of small businesses different than large businesses?

[GailL1]

It is the difference in the nature of health insurance between larger and smaller employers and the coordination of payers.  The difference lies in the richness of the benefits and networks - drug coverage too.  

As you probably noticed for large employers - Medicare pays 2nd.

For smaller employer plans - Medicare pays 1st.  Thus Part A & B are needed to enforced this hiearchy for the smaller employers,

There is NO substitute for Part B - Medicare.  In fact, if after you lose your employer coverage, if you stick with Traditional Medicare, Parts, A, B and D - you will somehow have to figure out how to cover your out of pocket cost since Trad. Medicare does not have a top out of pocket limit - some people buy a MediGAP plan - there are several.  This type of “GAP” coverage  picks up some or all of the cost which you will have to cover - or you could decide on a Medicare Advantage plan - another way to get your Medicare benefit but MA plans work in a different way. - got to have Part A & Part B for either.

Part A is Hospital Insurance and inpatient rehab at a facility; think the hospice benefit is in there too.

Part B which is outpatient stuff - docs, test, equipment, vaccines, etc. is paid for by premiums which all beneficiaries pay or has some other government entity pay for them, if they are very low income.  

These premiums only represent 25% of the cost of the Part B program - the other 75% is paid by the US government out of the

General Fund.   Most people pay $ 164.XX in 2023 - the cost usually goes up every year but not always.  

With higher income (over $ 91K per year, a beneficiary pays more (sometimes lots MORE) in Medicare Part B premiums.

So you will need to stay with Part B, pay your premiums and then if you have a claim, Medicare will pay their part (80% of the Medicare

negotiated price) 1st and your employer coverage will get the claim and pay their part - anything remaining after they both pay will be your responsibility

You will need to sign up for a Medicare prescription drug plan [PDP] (Part D ) unless your employer gives you a certificate of creditable coverage - Medicare - Notice of Creditable Coverage.

If this is approved you can wait on getting a PDP (Part D) until you lose your employer health benefit. 

You need to sign up for Part A and Part B - since your employer is small and if you are 65 Medicare is your health insurance - with or without employer coverage.  There is no way to get around it.

Sorry -

[Tonster521]

@GailL1  Once again, you have done "yeoman's work" explaining Medicare and its complex provisions especially Coordination of Benefits (COB) and Medicare Secondary Payer (MSP). FYI, "yeoman's work" is an expression that is used to acknowledge hard and valuable work that benefits the greater good. I am not referring to the Navy Occupational Specialty (NOS) - Yeoman. 

As you pointed out, the Medicare Part B contribution ($164/month) is probably one of the best deals that most of us will receive in our lifetime. Essentially, we contribute only 25% (currently $164/month) of its estimated cost ($656/month). In other words, most of us contribute only 25 cents for $1.00 of Medical Insurance coverage (Part B).

Based on the info that TimW provided, your suggestion to stay with Medicare Part B is correct. I will provide TimW as well as other readers with some additional info that may help explain the 20 employee exception.

[TimW952842]

Sorry to be hard-headed about this, but I still don’t get it. If I have coverage that is acceptable (“creditable”), why does it matter what size employer I work for?

[Tonster521]

@TimW952842 About 40 years ago (perhaps the early 1980s), the SS Program was struggling. The economy was in bad shape and FICA taxes were decreasing. The SS Trust was close to depletion. Congress addressed the issues via a number of actions (i.e., increase FICA taxes, increase the retirement age from 65 to 66 through 67, reduce cost shifting from employers to Medicare, etc.). In 1985, Congress created the Consolidate Omnibus Budget Reconciliation Act (aka COBRA) which not only required certain employers who employed 20 or more employees to offer continuation health insurance coverage in certain situations, but also stopped shifting health care costs to Medicare by placing Medicare as a second payer in certain situations. I don't know why Congress drew a "line in the sand" at 20 employees. My best guess is that since Congress already used 20 employees for continuation health insurance coverage, they simply used 20 employees to stop shifting costs to Medicare. So, for employers with 20 or more employees, they had to pay first. For employers with less than 20 employees, Medicare will pay first. You are in the latter case which means you need to keep Medicare Part B unless you elect to self insure to save just $164/month. That would be taking on a huge risk. Hope this helps.

[TimW952842]

I appreciate all the information from everyone. I guess I am just an outlier for Medicare right now. Admittedly I have a good income, so I am paying many multiples of the $164 premium and really getting nothing for it since my employer healthcare is perfectly fine. It’s just frustrating. 

[GailL1]

As I explained above, the size of the employer (20 employees - over or under) affects the richness of the benefits and how Medicare works with the EH plan - 

It is just an insurance thing - a small employer does not have access to the plans that a larger one does.

The credible comes into this mix also - if the benefits aren’t up to Medicare’s standards, then the plan isn’t counted at all and a person would have to have to pick a Medicare sanctioned plan if they want to avoid a premium penalty - which last forever, BTW.

The only way for a beneficiary can get out of paying a premium for Part B is to be (income and asset) eligible for a Medicare Savings Program and then their state covers the Part B premium.  

Being a Veteran and having full coverage / priority status where you only use the VA system - also can eliminate the need for Part B but then you have to always use the VA system unless it is an emergency.    

Also, you are not the judge of what is credible - Medicare determines it and  if you still have EHB - they determine it by the richness of the plan and smaller employer aren’t really offered the crème of the cop.

Part B premiums from beneficiaries is the funding mechanism for Part B - it represents 25% of the cost of the program - the other 75% come from the USA General Fund.

Part A is the only Medicare Part that comes from one’s payroll taxes while working.

[TimW952842]

I understand what you're saying.  I take issue with the assumption that small employers are less likely to have creditable health insurance than larger employers.  That's certainly not the case for me.

[GailL1]

@TimW952842 

A Medicare link that may answer some of your concerns.

Medicare.gov How Medicare Works With Other Insurance

[Tonster521]

@GailL1 A pertinent Medicare link. Thanks for the info/link

[GailL1]

It is more the richness of the benefits, size and diversity of the networks 

The term “credible” is mostly used for Part D - prescription drug coverage.  For Part B it depends on if the employer plan is a group plan - and is an adequate substitute for Medicare Part B.  

If you are still in doubt - have your employer complete

CMS FORM L564 ReQuest for Employment Information

[sktn77a]

It sounds like your employer's medical coverage is essentially a Medicare "Supplement" (secondary) type coverage.  That's it - not a great benefit but better than nothing!