Retiree insurance

If you're retired and have Medicare and Group health plan (retiree) coverage from a former employer, generally Medicare pays first for your health care bills, and your Group health plan coverage pays second.

7 things to find out about your retiree coverage

  1. Is my retiree coverage considered as creditable prescription drug coverage? Creditable prescription drug coverage is coverage that's expected to pay, on average, at least as much as Medicare's standard prescription drug coverage. You’ll need to have creditable coverage in order to avoid having to pay a Part D late enrollment penalty, if you choose to enroll in Medicare prescription drug coverage after your Initial Enrollment Period is over.
  2. Can you continue your employer coverage after you retire? Generally, when you have retiree coverage from an employer or union, they control this coverage. Employers aren't required to provide retiree coverage, and they can change benefits, premiums, or even cancel coverage.
  3. What's the cost and coverage? Your employer or union may offer retiree coverage for you and/or your spouse that limits how much it will pay. It might only provide "stop loss" coverage, which starts paying your out-of-pocket costs only when they reach a maximum amount.
  4. What happens to your retiree coverage when you're eligible for Medicare? Retiree coverage might not pay your medical costs during any period in which you were eligible for Medicare but didn't sign up for it. When you become eligible for Medicare, you will need to enroll in both Medicare Part A and Part B to get full benefits from your retiree coverage.
  5. How does your retiree coverage work with Medicare? Get a copy of your plan's benefit booklet, look at the summary plan description provided by your employer or union, or call your employer's benefits administrator.
  6. Should you keep your retiree coverage if you qualify for Extra Help paying for Medicare drug coverage? If you have limited income and resources, you may qualify for Extra Help, even if you have creditable retiree drug coverage. With Extra Help, your drug costs through Medicare may be lower than what you pay with your retiree coverage.

    Before you make any decisions, check with your retiree coverage to find out if you’ll lose retiree benefits (including any non-drug health coverage) for yourself and/or your spouse or dependents if you get Medicare drug coverage. Call 1-800-MEDICARE (1-800-633-4227; TTY: 1-877-486-2048) if you don’t understand how Medicare drug coverage will affect your current retiree drug and health coverage.

  7. If I get both Medicare and Medicaid, should I opt out of automatic enrollment into a Medicare drug plan? If you qualify for both Medicare and full Medicaid benefits, you’ll automatically qualify for Extra Help and get enrolled in a Medicare drug plan unless you choose a plan yourself or opt out of auto-enrollment. You’ll get a letter from Medicare (CMS Product No. 11154 or 11429) explaining your options.

    If you want to disenroll from the Medicare drug plan you’ve been automatically enrolled in, call 1-800-MEDICARE. Tell the customer service representative that you decline Medicare drug plan enrollment. If you want, you can also tell the representative that you’d like to opt out of auto-enrollment permanently.

    Note: If your employer or union plan gets the Retiree Drug Subsidy (RDS) from Medicare, then you won’t get automatically enrolled in a Medicare drug plan. You’ll get a letter from Medicare (CMS Product No. 11334) letting you know you qualify for Extra Help and explain your options.

If your former employer goes bankrupt or out of business, Federal COBRA rules may protect you if any other company within the same corporate organization still offers a group health plan to its employees. That plan is required to offer you COBRA continuation coverage. If you can't get COBRA continuation coverage, you may have the right to buy a Medigap policy even if you're no longer in your Medigap open enrollment period.

You may want to talk to your State Health Insurance Assistance Program (SHIP) for advice about whether to buy a Medicare Supplement Insurance (Medigap) policy. Since Medicare pays first after you retire, your retiree coverage is likely to be similar to coverage under Medicare Supplement Insurance (Medigap). Retiree coverage isn't the same thing as a Medigap policy but, like a Medigap policy, it usually offers benefits that fill in some of Medicare's gaps in coverage—like coinsurance and deductibles. Sometimes retiree coverage includes extra benefits, like coverage for extra days in the hospital.