Medicare and Retirement Planning
Gracefully handling the most delicate conversation since the birds and the bees.
As employees continue to delay retirement, employers are faced with many changes associated with an aging workforce. One issue many employers aren’t prepared to handle is the conversation around Medicare; as employees become eligible, how can employers accurately (and legally) help their employees navigate their choices? As it turns out, very, very carefully. Often, Medicare can provide better coverage (for a lower cost) than an employer-sponsored plan. However, communicating that to your employees can be a little tricky.
Here are our top tips to start the medicare and retirement planning conversation:
- Encourage, not discourage – Employers are prohibited from discouraging employees from enrolling in their group health plan based on their eligibility for Medicare, which sounds pretty reasonable. However, that means that any conversation regarding electing only Medicare and moving off of the employer health plan needs to be framed in a certain way. The goal is to ensure your employees know that they can absolutely remain on their current plan (as long as they are employed) and your talk is only to make sure they know their options.
- No incentives – Many employers offer a small cash payment to employees who decide not to elect health coverage through their employer. As long as those payments are within ACA limits, that is a completely acceptable practice. Keep in mind, when you have Medicare-eligible employees, that practice can land you in some hot water. Even if you offer those payments evenly to all employees, offering money to Medicare-eligible workers who do not elect your employer health plan will leave you liable for significant penalties. How significant? $5,000 per participant.
- Know your plans – If it really is better for employee to forego your employer health plan, great! You’ve saved both your employee and the company money and ensured your employee receives the best health plan available to them. However, you need to ensure you’re providing your employee with accurate information. If your employee decides to switch to Medicare as their sole health plan provider, they need to do it entirely based on accurate information. If they decide to make the switch based on misinformation, you’re liable for the same penalties. Employers must notify their Medicare Part D-eligible plan participants by October whether their prescription drug coverage is creditable or non-creditable. Since you’ll be reviewing your plans anyway, use that time to compare your plan coverage to Medicare in your area.
The decision to educate your employees on Medicare options is easy. Your challenge will be the delivery; to accurately (and legally!) guide them through their options.