Like many other areas of the healthcare industry, enrolling in Medicare often leads to more questions than answers. If you work for a small business, you may be wondering if you can use your health reimbursement arrangement (HRA) to pay for Medicare premiums. But first things first: how (and when) are you supposed to enroll — and what are your options?
Overall, there are two types of Medicare: Original and Advantage. Original Medicare allows you to see any doctor you wish, but can also leave you vulnerable to high out-of-pocket expenses. With Medicare Advantage (Part C), your network of doctors is narrower but usually comes at a lower cost.
Within Medicare, you have three additional plan types. Medicare Part A covers hospitalization, Part B covers doctor visits and outpatient services, and Part D covers prescription drugs. Signing up for all three “parts” provides you with comprehensive coverage.
It is important to note that most Medicare Advantage policies include Part D coverage, but you should not assume this is the case. Be sure to double-check when choosing a plan.
Your initial enrollment period for Medicare Parts A and B is dependent upon your 65th birthday because that's when you become eligible. Your enrollment period will be a total of seven months — beginning three months prior to your 65th birthday and ending four months after.
If you miss your initial enrollment period, you may be able to sign up during special enrollment, but if you do not qualify, you’ll need to wait for the open enrollment period, which begins January 1 and ends March 31.
The most important thing to remember is that this process is not automatic unless you are already receiving Social Security benefits. The government will not send you a notice when your initial enrollment period begins. The onus is on you, the enrollee, to sign up when you are able.
If your company offers an HRA to help cover the cost of insurance premiums, you are allowed to use that money to cover Medicare premiums. The money is still tax-free, and it still comes through in your paycheck. You may see a decrease in your allowed amount if your Medicare premiums are lower than your previous individual health insurance premium.
Enrolling in Medicare can be confusing and overwhelming, but it is important if you work for a small business because it is the default primary insurance carrier when you turn 65. If this scenario applies to you, using your healthcare reimbursement plan can help cover the cost of your Medicare premiums and save you some hard-earned money.