Will Your Employer Force You to Get Medicare Advantage Plans When You Turn 65?

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In some states, employers are telling seniors that they need to give up their employer-sponsored health plan and get a Medicare Advantage plan when they turn 65. It occurs in some places where the employer offers a health plan as supplemental coverage for seniors. Once they become eligible for Medicare at 65, they are often left without a choice and must lose this retirement benefit if they do not enroll.

They must either get a Medicare Advantage plan or lose their company-provided health benefits. It is creating a problem in some places because there may be a limited number of Medicare Advantage plans available, and some medical services may not be available in their area with those plans.

There are currently 12 states, according to MSN, that allow it to happen. They are Alabama, Arizona, Colorado, Connecticut, Georgia, Illinois, Kentucky, Maine, Missouri, New Hampshire, Pennsylvania, and West Virginia.

Why Some States Are Making This Change

In recent years, KFF says an increasing number of employers have stopped providing coverage to retirees—dropping as low as 21 percent in 2023. A growing number of states now require Medicare Advantage plans because it will save companies many thousands of dollars in senior health liability costs.

Some Employers Can Terminate Your Employer-Sponsored Health Plan at 65

Even if you do not live in one of the above-mentioned states, know that some employers can automatically terminate your coverage once you reach 65. Find out if your employer does this so you are not left without coverage after you turn 65.

PBS says a small employer with less than 20 employees can legally drop your employer-sponsored health plan once you turn 65. It is optional as to whether they will keep you covered or not.

The Reason for the Name: Medicare Advantage

Medicare Advantage plans, also called Medicare Part C, differ from traditional Medicare. The government requires that these plans contain all the benefits of traditional Medicare. The companies usually add more features, such as dental, hearing, vision services, and possibly wellness care. Instead of being a government-provided service, Advantage plans are owned and controlled by private industry. Once you have a Medicare Advantage plan, you cannot get Medicare Supplement plans in many states.

Advantage plans may also include some cosmetic procedures. These other services may depend on which provider you have and in what state you live. Another advantage is that they often have lower co-insurance and copay costs.

Some employers automatically enroll their employees in traditional Medicare when they reach 65. People with some health conditions, such as end-stage renal disease (ESRD), amyotrophic lateral sclerosis (ALS—also called Lou Gehrig’s Disease), or other disabilities, are automatically enrolled when they start getting disability benefits.

Premiums May Vary

Once you apply for Medicare, you must pay the premiums for Part B and any other supplemental Medicare plans you choose to get. The drug coverage plan—Medicare Part D, has a premium, and so do any other supplemental plans you want. The government determines the costs for traditional Medicare are standard across the United States. For 2024, the cost of Medicare Part B is $174.70, but it changes every year.

The costs for coverage by a Medicare Advantage plan have a base price the same as traditional Medicare, but it may be higher, depending on the provider. Some Advantage plans are free, but you must pay for Part B. A few companies, however, will charge additional fees, so if you need to buy an Advantage plan, you need to be aware of other possible charges.

Enroll in Medicare

People are required to enroll in Medicare when they turn 65. An exception to this rule is if they continue working and have a health plan through their employer.

A penalty is required if you do not apply when you turn 65 or after you stop working. MedicalNewsTodaysays that the penalty is an additional 10 percent of the cost of Part B coverage for each year you delay. It is a permanent penalty that you must pay every year you have Medicare.

Eligibility for Medicare

Anyone who has worked for at least 10 years in the United States is eligible for Medicare. Once they apply, they are enrolled in Medicare Part A for free. Medicare.gov says it covers inpatient care in a hospital, skilled nursing home care, hospice care, and home health care. It does not cover long-term care.

Social Security Benefits Depend on Getting Medicare

The healthcare company VeryWellHealth says that if you do not apply for Medicare at 65, you will also lose your Social Security benefits. Since Part A does not cost if you choose to get Social Security, you can get it without Part B if you do not want it.

Reducing Employer Healthcare Benefits

When a private-sector employer offers healthcare benefits to retirees, the Department of Labor says that they have the right to reduce or even cut out those benefits when they want to since no law prevents them from doing so. If the plan guidelines reveal that the employer will cover you for a certain period—or your lifespan—the coverage must continue.

When you get closer to retirement, find out if you will be required to give up your employer-sponsored healthcare and must switch to Medicare. You also want to ensure that you have included the cost of Medicare premiums in your retirement plans, money for co-insurance, copays, and deductibles. Once you get Social Security, Medicare costs will be withdrawn before you get the money. People who are high-earners must pay more for their Medicare.

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