San Francisco 鈥� Bruce Osterweil is a lucky man to live just a short walk from where San Francisco鈥檚 Golden Gate meets the cold, rough waters of the Pacific Ocean. He is also a lucky man to have married his wife, Patricia Furlong, who has long provided the family鈥檚 health insurance through her job at a small financial consulting firm.
But last month, Osterweil鈥檚 wife turned 65 and decided to retire, and although she may walk away with a crystal bowl or a golden watch for all those years of service, she will also walk away from her company鈥檚 generous health insurance benefits. That means Osterweil, who is 59 and a self-employed benefits consultant, is shopping for his own health insurance.
Bruce Osterweil long relied on his wife鈥檚 employer-sponsored health plan for coverage, but she recently turned 65 and signed up for Medicare (Photo by Sarah Varney/KHN).
鈥淚鈥檓 really surprised at how hard it could be for just the average person who isn鈥檛 an actuary or benefits consultant to figure any of this out. It鈥檚 astonishing,鈥� he says.
When a spouse or parent signs up for Medicare, it is often perplexing 鈥� and unnerving聽鈥� for the rest of the family who may have grown used to cushy employer-sponsored coverage.聽For example, young adults up to age 26, who were covered under their parent鈥檚 insurance, are no longer covered when their parent moves to Medicare.
鈥淢edicare doesn鈥檛 cover dependents,鈥� according to Joe Baker,聽president of the , a patient education group with a busy hotline for those with Medicare questions. 鈥淗owever, if you鈥檙e a dependent of someone who is losing coverage because they鈥檙e retiring and going into Medicare, you can continue your coverage for 3 years under COBRA.鈥澛�
COBRA is a federal law that allows someone to pay full price to stay on their employer鈥檚 group plan. They can also shop around for an individual plan. For healthy young adults, Baker says families should look to see if they can find less expensive coverage.
But buying an individual plan聽can be聽daunting for older adults in their late 50s or early 60s who are more likely to have some health problems. They are at the mercy of the private insurance market. 鈥淲e do frequently get calls from folks,鈥� says Baker, 鈥渨ho cannot find insurance policies in the state in which they live either because they have pre-existing conditions or the policy is so expensive they really can鈥檛 afford it.鈥�
The younger spouses of Medicare beneficiaries who have been denied coverage聽鈥� and have been uninsured for six months聽鈥� can apply for coverage through their state鈥檚 so-called high risk pool. Baker notes that there should be better options for older adults starting in 2014, when a key provision of the federal health law will prohibit insurance companies from denying adults coverage because of a pre-existing condition.
Another confounding question is what to do when someone turns 65 and decides to keep working. Should they keep their insurance or sign up for Medicare coverage?
The answer hinges on just how big of a company you work for. 鈥淭he [federal] rules are quite clear,鈥� says Baker. 鈥淚f you鈥檙e working at an employer with more than 20 employees and you have coverage through that employer or through a spouse working at company with more than 20 employees, you can continue to keep that coverage. That means you don鈥檛 really need to enroll in Medicare.鈥�
Baker says many people will still be covered by聽Part A of Medicare 鈥� which covers inpatient hospital care 鈥� because there is no premium, and it may pay some of the costs not covered by your group health plan. But most choose not to聽enroll in Part B 鈥� which covers doctor鈥檚 visits 鈥� because it costs about $100 dollars a month and is often largely redundant.
It is a different story if you work at a small company with fewer than 20 employees. In that case, Baker says, the federal rule is: You need to enroll in Medicare.
鈥淓mployers think they鈥檙e doing people a favor, saying, 鈥極h don鈥檛 worry, you can stay on our plan. Don鈥檛 worry about Medicare.鈥� If they鈥檙e under 20 full time employees, they risk the insurance company finding out you鈥檙e Medicare eligible and saying, 鈥榊ou鈥檙e off the plan and by the way everything we paid after you turned 65 and were eligible for Medicare, you need to pay us back.鈥欌��
To avoid any foul ups, Baker recommends that as people near their 65th birthday, they should start talking to their human resources department or call Social Security.
Related, earlier KHN story: Retirees Can Find Insuring Young Adult Children Difficult