Employee benefits are complicated, and it just got more complicated for small businesses using UPMC Health Plans. UPMC Health Plan recently announced that as of June 1, 2021, they have made changes to policies for businesses with less than 20 employees. The change only affects active employees who are 65 years of age or older. These employees’ UPMC claims will be paid as though they had both Medicare Part A and Part B in place, so if they do not, some claims will be paid at a lesser amount than the employee would expect. Essentially, UPMC wants Medicare eligible active employees to be using their Medicare benefit and not their UPMC employer plan.
It’s not unusual for small employers to move their Medicare eligible employees off their company policy and have them apply for Medicare. Most of the time this change can benefit both employer and employee because the cost of Medicare premiums are typically less than the cost of UPMC premiums, and many times the benefit cost shares are lower (zero deductibles and low copays). So for both employer and employee, Medicare can be a Win-Win.
So, then everyone’s happy right?
Not necessarily. Since UPMC would like employees to also apply for Medicare Part B. Remember, Medicare Part A covers hospital expenses, then Part B covers other expenses like services or supplies needed to diagnose or treat medical conditions. It also covers ambulance services, durable medical equipment, mental health services and some drugs. When enrolling in Part B,the standard premium then payable to Social Security is currently $148.50 a month. However, for people whose previous year’s income tax shows their income as being $88,000 indv or $176,000 joint or more, their Part B premium will be higher. For these employees their Part B premiums could rise to $220.20 and as high as $582 per month. Ouch.
While It Works for Some It Will Be Challenging for Others
While many Medicare eligible employees can make all this work, there are situations where this will present significant challenges. For example, someone over 65 might have their spouse and children covered through their employer’s insurance plan. If the employee is moved off their employer’s plan, then their family will be moved off the plan as well. While the employee will be covered with Medicare, the rest of the family will need to purchase insurance to cover their needs.
Another challenging situation involves anyone who might be taking higher cost prescription medications, as all Medicare prescription drug plans make those prescriptions costlier due to a “donut hole” exposure which removes the copay protections and forces the employee to pay a percentage of the cost of the drug. Double ouch.