Client told by HR they can't drop out of employer insurance after 65 any month to be on Medicar

[yorkriver1]

To be on Medicare.
Probably confusing the IRS rules around pre-tax payroll with very limited qualifying events to leave employer coverage.
OR I am wrong.

 

[fed up]

Some employers actually ask employees to go full Medicare after 65 in rider to cut costs. I have a friend who was put in this bind because she went on Medicare with employer HC as a backup as a supplement and ran into difficulty when she retired.

 

[somarco]

HR is not usually your best resource. Had a guy a few years back T65 in May, June . . . somewhere in that area. HR said he had to wait until open enrollment to leave the EGH effective 1/1 the following year.

He was going to work past 65 but wanted off the group plan. They refused to let him bow out until OE.

 

[Truce]

This has always been cut and dry in my experience, but I just perused the IRS regs for proof about section 125 / HIPAA / QLE and I see too many words like "the employer MAY permit" the employee to exit cafeteria plan mid year when gaining access to Medicare

I've never, ever, had a problem with a client who asked to drop employer coverage after 65 when enrolled in a large employer plan, although I've seen quite a few ask for the Medicare card as proof to make a mid year change. I even had one whose employer refused to drop them mid year when they waited three months to submit proof of Part B. Letter of the law vs spirit of the law.....seriously no one wins when HR digs in here.

(e) Entitlement to Medicare or Medicaid. If an employee, spouse, or dependent who is enrolled in an accident or health plan of the employer becomes entitled to coverage (i.e., becomes enrolled) under Part A or Part B of title XVIII of the Social Security Act (Medicare) (Public Law 89–97 (79 Stat. 291)) or title XIX of the Social Security Act (Medicaid) (Public Law 89–97 (79 Stat. 343)), other than coverage consisting solely of benefits under section 1928 of the Social Security Act (the program for distribution of pediatric vaccines), a cafeteria plan may permit the employee to make a prospective election change to cancel or reduce coverage of that employee, spouse, or dependent under the accident or health plan.

 

[kgmom219]

"MAY" is the operative word in the regulations.

The employer can write a Summary Plan Description that says you cannot drop out of the plan mid-year and be ERISA compliant. If that's what the SPD says, that's the rule.

 

[yorkriver1]

"MAY" is the operative word in the regulations.

The employer can write a Summary Plan Description that says you cannot drop out of the plan mid-year and be ERISA compliant. If that's what the SPD says, that's the rule.

So SPD's don't have to include the list the IRS has. Just to double check, in Section 125 regs, if the IRS says turning 65 is on the list for qualifying events (which they do), the employer can still say no? This is the weekend, I have a compliance specialist in my upline I can also check with.

 

[yorkriver1]

This has always been cut and dry in my experience, but I just perused the IRS regs for proof about section 125 / HIPAA / QLE and I see too many words like "the employer MAY permit" the employee to exit cafeteria plan mid year when gaining access to Medicare

I've never, ever, had a problem with a client who asked to drop employer coverage after 65 when enrolled in a large employer plan, although I've seen quite a few ask for the Medicare card as proof to make a mid year change. I even had one whose employer refused to drop them mid year when they waited three months to submit proof of Part B. Letter of the law vs spirit of the law.....seriously no one wins when HR digs in here.

(e) Entitlement to Medicare or Medicaid. If an employee, spouse, or dependent who is enrolled in an accident or health plan of the employer becomes entitled to coverage (i.e., becomes enrolled) under Part A or Part B of title XVIII of the Social Security Act (Medicare) (Public Law 89–97 (79 Stat. 291)) or title XIX of the Social Security Act (Medicaid) (Public Law 89–97 (79 Stat. 343)), other than coverage consisting solely of benefits under section 1928 of the Social Security Act (the program for distribution of pediatric vaccines), a cafeteria plan may permit the employee to make a prospective election change to cancel or reduce coverage of that employee, spouse, or dependent under the accident or health plan.

I never ever either until a client this week, who waited until open enrollment to bring it up, was T65 in August and has been refused so far by the benefits dept. Re: employers cutting costs, why wouldn't they allow it in their SPD. One possibility is they don't know about the T65 option. Also, the client bought MedSupp and PDP for 8/1/23.

 

[yorkriver1]

Some employers actually ask employees to go full Medicare after 65 in rider to cut costs. I have a friend who was put in this bind because she went on Medicare with employer HC as a backup as a supplement and ran into difficulty when she retired.

Employers can't legally require employees to drop employer coverage. They can and must, if a small company 19 or fewer employees warn employees they must enroll in Medicare at 65 because the law is that smaller employer group coverage is secondary to Medicare. For 20+ employees, the employer coverage is primary if an employee enrolls in Medicare. It's in the employee's best interest to at least enroll in free part A, which could help in a large hospital bill situation. And, to geek out, not if they have money contributed to an HSA after they are Medicare eligible.

 

[yorkriver1]

"MAY" is the operative word in the regulations.

The employer can write a Summary Plan Description that says you cannot drop out of the plan mid-year and be ERISA compliant. If that's what the SPD says, that's the rule.

Reading an in depth review of Section 125 compliance. The IRS has a list of qualifying event mid plan year options, but the employer is not required to offer all or any of them. Why they wouldn't allow an employee to drop coverage they are subsidizing is puzzling, but they can refuse, it appears. Now the person needs to have the HR be absolutely sure they are not assuming the SPD, if they know what that is, doesn't list Medicare eligibility as a QE.