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Medicare Secondary Payer rules can leave small-firm retirees with bills
Workers age 65 and older who delay Medicare at employers under 20 employees can find their group plan no longer pays first, shifting large balances to them.
A coverage gap can surprise workers who keep working past 65 at small employers and skip Medicare enrollment, a dynamic tied to the Medicare Secondary Payer rules, according to Yahoo Finance. The story describes how a machinist at a 12-person tool shop assumed his long-running group health plan would keep paying claims as it always had, until an outpatient surgery produced a response where the insurer paid only a fraction and the remainder became the patient’s responsibility.
At employers with fewer than 20 employees, Medicare generally becomes the primary payer while the group plan turns secondary when a worker is Medicare eligible, Yahoo Finance explains. That means the payer order can flip after the worker turns 65, even if they remain on the same employer plan.
The article also highlights other cost consequences tied to delaying Medicare, including a permanent 10% monthly Part B surcharge applied for each year the person missed enrollment, based on the story’s reference to a $203 base premium for life. It adds that unenrolled small-firm workers may be left responsible for full billed hospital charges because the coverage mechanics require active Part A enrollment for claims to be paid.
Yahoo Finance notes that employers with 20 or more employees generally follow the opposite coordination setup, with the group plan acting as primary and Medicare secondary, which is why delaying Part B until retirement is described as generally safer in those cases through the 8-month Special Enrollment Period without penalty.