Medicare Planning for Business Owners

As of January 1, 2011 an estimated 10,000 people started turning 65 each day. This will continue at this rate for about 19 years. This group is the most expensive to insure.

An individual between 60 and 64 costs four times as much to insure as a thirty-something. In an actual client company (40 people with a $500 deductible), an individual aged 30-39 costs $344; another aged 60-64 costs $1049. At age 65, the same employee would cost $1291 per month.

Fortunately Medicare exists and most people age 65+, are eligible for its services whether they are working or not. Signing up for Medicare can easily be done by phone or online up to three months before one's 65th birthday.  

Each enrollee automatically gets Part A, which is for hospitals, and may elect Part B, which is for doctors and other non-hospital expenses. Part B does cost (this year it is $115.40 per month but can go higher).

Extending coverage beyond Medicare

After obtaining the Medicare number, applicants can elect additional coverage. This is done with either a supplemental policy or a total Medicare replacement policy known as a Medicare Advantage Plan.  

Advantage plans, such as Kaiser or Secure Horizons, include drugs and are considered Medicare replacement programs. Often these plans are less expensive.

Supplemental or Medigap plans are available as well (AARP, Anthem Blue Cross, Blue Shield or Aetna). Premiums can range between $120 and $180 per month. They cover what Medicare payments do not fully cover. Buying a supplemental plan also requires a prescription drug plan purchase provided by insurance companies.

Employed over 65

What happens if a person of Medicare age is still working? Employer and employee can benefit by meshing with the Medicare system. Although it must be voluntary, it is substantially better for both the employee and the employer to terminate their group coverage and use Medicare plus an add-on.

If a company has less than 20 employees, Medicare is considered primary and Medicare-eligible employees must enroll in Part B (Part A is automatic).

For companies over 20 employees, Medicare is considered secondary, and employees may hold off from signing up for Medicare Part B until they are no longer employed.

Here is a quick comparison of the premium for the $500 deductible mentioned above versus a 100% Medicare plan with all parts accounted for as follows:

Employer plan:                         $1,291.00

Medicare Part B:                       $115.40

Supplement Plan F:                   $118.00

Drug Plan:                                $50.00

Total:                                       $283.40

Savings per Month:                  $1,007.60

In summary, employers and employees have options which can lower costs.

Announcement: Medicare Open Enrollment Period  

What Would Lynn Do?   

Q: I am an elderly woman, age 90. I let my Medicare Supplement lapse because I forgot to pay the bill for 3 months. The insurance company wouldn't reinstate me without my proving I am healthy, but I have congestive heart failure and diabetes.   What can I do?   

A:  You could:

1. Lean on the insurance company. They need to understand that elderly people sometimes forget things. 
2. Medicare alone is adequate. They pay 80% of doctor bills and most hospital expenses.  
3. Wait until open enrollment and move to an HMO type plan. 
4. Apply to Medi-cal for excess expenses.
5. None of the above.    

None of the above.

Doing some research, I  discovered that AARP only asks a few health questions, none of which applied to this caller's conditions.  She completed the application and it was submitted and went through without a hitch.  She now has coverage that bridges the gap between what Medicare allows and the bills. She has no out of pocket risk.

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