Medicare Advice for Employers & Non-Profit Leaders

For employers with fewer than 20 employees, Medicare generally becomes the primary payer when an employee turns 65 and becomes Medicare eligible. The employer group health plan typically becomes secondary.

This means Medicare pays first, and the employer plan may only pay after Medicare has processed the claim. In many cases, the employer plan may pay little or nothing if the employee has not enrolled in Medicare properly.

Employees age 65 and older should typically enroll in Medicare Part A and Part B during their Initial Enrollment Period. They may also need to enroll in a Medicare Part D prescription drug plan to avoid future penalties. If an employee does not enroll in Part B when required, the employer plan may deny claims that Medicare should have paid, leaving the employee with significant out-of-pocket exposure.



For small employers, the focus should be on early communication, clear documentation, and helping employees transition correctly. Employers may choose to transition employees off the group plan, keep them on the plan as secondary coverage, or explore a compliant contribution strategy. The right approach should be documented clearly and reviewed carefully.

For employers with 20 or more employees, the rules are different. In most cases, the employer group health plan remains the primary payer for actively working employees age 65 and older, and Medicare becomes secondary.

Employers with 20 or more employees generally must offer the same coverage to Medicare-eligible employees as they offer to other active employees. They cannot reduce benefits because an employee is Medicare eligible, require the employee to enroll in Medicare, or pressure the employee to leave the group health plan.

Employees in this situation may have several options. They may stay on the employer plan only and delay Medicare Part B and Part D if their coverage is creditable. They may enroll in Medicare while keeping the employer plan, though this is not always cost-effective because the employer plan still pays first. Or they may voluntarily drop employer coverage and move to Medicare, but that decision must be employee-driven.



For larger employers, compliance is especially important. Employers should maintain consistent plan eligibility, provide required notices, and avoid offering incentives or reimbursements that could be interpreted as steering employees toward Medicare.