HSA + Medicare

[yorkriver1]

I doubt any of them are due to HDHP.

OTOH, does CMS really check to see if a plan is creditable or not.

My experience is . . . no, they do not.

I was told last time by someone at Social Security whoever at the employer signs the form attesting to the coverage, takes on legal responsibility for telling the truth.
We'll see with my current one where the proof will have to go back to 3/1/2006, the date I am told is the start for Part D. It's one employer, federal government, the deceased spouse's employer.

 

[kgmom219]

All good! If only Saturday mornings were dancing in front of the TV like days gone by.
However, I am not 100% on the Rx plan glitch with HSA's past 65.
Not all HSA compatible plans are creditable coverage, but some are, with lower deductibles. My question is, did the waiver for HSA eligibility past 65 take into account the penalty for no creditable drug coverage and include an exception.
And, in case of confusion over "creditable" vs "credible". "Credit" is given for the time the person had valid coverage. Therefore "able" to be "credited". Nerd rant of the day.

You are co-mingling the terms. HDHP=HSA Eligible. HSA Eligiblity does not determine if a plan is creditable.

1. If its an employer plan AND the employer has 20+ employees, its creditable under ACA guidelines. (Mini-Med's are not HSA eligible)
2. Employers certify annually with regards to Medicare Secondary Payor status
3. HSA plans are responsible for determining if a plan is HSA eligible
4. The waiver only applies if the enrollee didn't have Part A OR B

 

[yorkriver1]

You are co-mingling the terms. HDHP=HSA Eligible. HSA Eligiblity does not determine if a plan is creditable.

1. If its an employer plan AND the employer has 20+ employees, its creditable under ACA guidelines. (Mini-Med's are not HSA eligible)
2. Employers certify annually with regards to Medicare Secondary Payor status
3. HSA plans are responsible for determining if a plan is HSA eligible
4. The waiver only applies if the enrollee didn't have Part A OR B

Thanks for being kind and helpful, very great knowledge and diligence.
Once again my writing is not as clear as would be ideal, so my question may have not been too clear. I'm good with who has to enroll in Medicare, employer size 19 and under employees, my leading discussion with the prospect was to discuss the possibilities around waiving Medicare due to the HDHP/HSA with a very large employer, as their question to me was about the requirement to enroll in Medicare, and I said maybe you don't have to.
After a second discussion, the prospect stated that there is a carve out first dollar RX coverage that looks like the familiar 4 tier copay prior to deductible coverage seen in many health plans.
This is seemingly incompatible with HSA allowable deductions in what I have read or heard of, not that I can't be learning all the time, pretty apparent here.
I am going to suggest my prospect obtain more information about the plan and whether in 2022 and beyond the carve out coverage or the HDHP/HSA plan will be considered creditable drug coverage for Medicare's rules. An article about this decision to waive Medicare and continue contributing to an HSA after age 65 at a large employer mentioned that with advice from a financial professional, the PDP penalty may be trifling compared to the benefits of large contributions and tax benefits. That won't be my influence for sure, as I am not a tax advisor.

 

[LostDollar]

........ benefits of large contributions and tax benefits. ..........

(Caveat, not an insurance agent or tax professional)

Aren't HSA contributions capped at amounts smaller than IRA contribution limits and at amounts much smaller than other retirement savings possibilities?

I'm not sure how legitimate it is to apply tax strategies for large 401K contributions to HSA contributions for a person 65 or older as a rationale for incurring lifetime PDP penalties.
(Small savings amount and limited time for money to grow)

Also, when a person rolls on into 70's, it is possible to start experiencing unanticipated health events which can suddenly turn a person from an earner to a non-earner, and a health spender rather than a health saver. Something like that could also upset a savings plan intended to offset a PDP penalty.

 

[LostDollar]

I am going to suggest my prospect obtain more information about the plan and whether in 2022 and beyond the carve out coverage or the HDHP/HSA plan will be considered creditable drug coverage for Medicare's rules.

I would also suggest being very careful with the way you word your suggestions. I don't see how any HR people can promise that a plan will meet (changing) government requirements multiple years in the future. I think this is just like PDP's, a person needs to review plan characteristics and government requirements each year.

 

[somarco]

I was told last time by someone at Social Security whoever at the employer signs the form attesting to the coverage, takes on legal responsibility for telling the truth.

Not doubting you, but there probably is some sort of attestation included in the form. The question is, does anyone at the govt level bother to check it?

There are plenty examples for defining creditable coverage, but WHO defines what is and isn't creditable coverage. In all the years of dealing with this stuff (mostly with group insurance plans) I have never encountered a situation where a letter/certificate of creditable coverage was denied.

Here are a few definitions for your leisure reading time.


Certificates of Credible Coverage Under the Health Insurance Portability and Accountability Act of 1996 - FindLaw

What is meant by Creditable Coverage and How do I know if I have Creditable Coverage?

What is Creditable Drug Coverage? | AARP Medicare Plans

Creditable Coverage | CMS


Plus one for credible coverage, just for good measure . . .

Credible Drug Coverage When Becoming Medicare Eligible

 

[TwoCents]

I was told last time by someone at Social Security whoever at the employer signs the form attesting to the coverage, takes on legal responsibility for telling the truth.
We'll see with my current one where the proof will have to go back to 3/1/2006, the date I am told is the start for Part D. It's one employer, federal government, the deceased spouse's employer.

I think you're getting processes mixed up. Related to the Part D LEP -- No employer has to sign for Part D attestation that the drug coverage offered by that employer is creditable. When a person signs up for a Part D plan (MAPD/PDP) then the carrier sends out a notice to the enrollee asking for their creditable coverage history. Proof isn't even required; it's up to the enrollee to be truthful.

Now with Part B enrollment if a person is enrolling after age 65 then yes, there is a form the employer can complete.

 

[LostDollar]

I was told last time by someone at Social Security whoever at the employer signs the form attesting to the coverage, takes on legal responsibility for telling the truth.
We'll see with my current one where the proof will have to go back to 3/1/2006, the date I am told is the start for Part D. It's one employer, federal government, the deceased spouse's employer.

If someone is just turning 65, why is there a need to document prescription drug coverage back to 2006?

When I went on Medicare, post 65, I only had to document employer health coverage, including a drug benefit, back to age 65 for my PDP application; not back to 2006.

 

[kgmom219]

Thanks for being kind and helpful, very great knowledge and diligence.

Once again my writing is not as clear as would be ideal, so my question may have not been too clear. Oh good...its not just me

After a second discussion, the prospect stated that there is a carve out first dollar RX coverage that looks like the familiar 4 tier copay prior to deductible coverage seen in many health plans.
This is seemingly incompatible with HSA allowable deductions in what I have read or heard of, not that I can't be learning all the time, pretty apparent here.
I am going to suggest my prospect obtain more information about the plan and whether in 2022 and beyond the carve out coverage or the HDHP/HSA plan will be considered creditable drug coverage for Medicare's rules. An article about this decision to waive Medicare and continue contributing to an HSA after age 65 at a large employer mentioned that with advice from a financial professional, the PDP penalty may be trifling compared to the benefits of large contributions and tax benefits. That won't be my influence for sure, as I am not a tax advisor.

If they have a large employer group plan AND reject A and B, they can contribute to the HSA without a penalty.

All large employer plans are creditable under ACA guidelines

 

[yorkriver1]

Again, respect, but I have to say what I experience. I can't find anything ACA related that excuses all large employer plans and declares that all coverage is creditable.
Also, a digression, what has been said about insured's leaving an employer plan after age 65 about creditable coverage certification being on the honor system is interesting and useful, but not the direct topic here, and thanks for the heads up.
What I am reading about creditable prescription drug coverage and have been told by my GA's VP of compliance (she has one job) is that large employer plans have to be individually classified (depending on deductible size and whether Rx coverage is first dollar--so a super high deductible HSA compatible plan often is not creditable), I don't see "always" creditable anywhere. Then there is my direct experience with my own client/employer group with more than 20 employees.
My GA's compliance department provides the employer group certification from the insurance carrier that the HSA compatible plan which has a deductible over $6,500 is not creditable because the actuarial equivalence to Medicare's standard plan is lower than required.

I also checked SHRM (NAHU for HR) and Word and Brown's site, one of the largest sources out west for insurance agents. Nerd note: they were pioneers of programs for side by side coverage comps between carriers. All sites say the same.
Here is the CMS rule from the CMS site:
WHAT IS CREDITABLE COVERAGE? Beginning January 1, 2006, Medicare beneficiaries will have the opportunity to receive subsidized prescription drug coverage through the new Medicare Part D program. Beneficiaries who choose not to sign up at the first opportunity may have to pay more if they wait to enter the program later after the open enrollment period. Beneficiaries who have other sources of drug coverage - through a current or former employer or union, for example - may stay in that plan and choose not to enroll in the Medicare drug plan. If their other coverage is at least as good as the new Medicare drug benefit (and therefore considered "creditable coverage" ), then the beneficiary can continue to get the high quality care they have now as well as avoid higher payments if they sign up later for the Medicare drug benefit. Under §423.56(a) of the final regulation, coverage is creditable if the actuarial value of the coverage equals or exceeds the actuarial value of standard prescription drug coverage under Medicare Part D, as demonstrated through the use of generally accepted actuarial principles and in accordance with CMS actuarial guidelines. In general, the actuarial equivalence test measures whether the expected amount of paid claims under the entity's prescription drug coverage is at least as much as the expected amount of paid claims under the standard Part D benefit.