If you are currently covered under your employer retirement health insurance plan (other than government), you might be in for a big surprise!

The health insurance market continues to evolve, and as more retired baby boomers are utilizing health insurance benefits, employers are looking for ways to reduce their costs.

What Will Change and Why?

For most people enrolled in Medicare Part A, Part B, or both, with their former employer providing a supplemental health insurance plan, which may include prescription drug coverage, watch your mail for important information about changes that may be forthcoming in the next few weeks.

The cost for health care is a liability for most employers, and they want to limit that liability by transferring the current retiree plans to the retiree!

As a result, here is what you may expect to see:

• Termination of the current employer plan as of January 1, 2021.
• Information on enrolling in a private Medicare exchange program.
• A transition company that will provide access to a Retiree Health Exchange that will offer various private health insurance carriers and a variety of Medicare Advantage, Medicare Supplement, and Prescription Drug Plans as well as Dental and Vision coverage options.

Don’t Ignore the Letter

The transition company will be the go-to organization for help with enrollment and may provide webinars and benefit advisors to guide you through the process of enrolling.

For many retirees this change may cause shock as change is always more difficult the older we get. So what are you to do if you receive one of those envelopes informing you that you have no other option but to enroll in the new program or lose the additional benefits you have through the current employer plan?

Firstly, do not ignore the letter and get more information!

The Options

First, I should say that I am not trying to make the employer the bad guy in all of this as they are trying to control their cost as any normal business would.

What is causing stress is the immediacy of needing to make the changes and the thought of losing health insurance if not acted upon within the provided time frame.

Medicare open enrollment is Oct 15 – Dec 7, and you should be communicating with the new plan advisors in September to gain a better understanding of the choices you will have under your new individual health insurance plans.

Let’s look at a few of the possibilities you may be facing with this change.

Replacing Coverage

If you are already enrolled in Medicare Part A (hospital) and Part B, and have your employer sponsored supplemental coverage (Medigap), including prescription drug coverage, you will be given options to replace that coverage.

You will be able to retain Medicare Parts A&B and elect Medicare Part D (drugs) or choose a comprehensive Medicare Advantage Plan that may also offer dental and vision plans.

The biggest questions that comes to mind for me are: Will the new coverage cost more than what I currently have? And will I have an option that provides the same level of coverage I currently have?

The simple answer is – it depends!

Health Reimbursement Accounts

The employer may also offer an additional benefit, a supplemental spending account, as a “sweetener” to ease the pain of the transition, but only if you enroll in one of the new plans and make regular monthly premium payments.

This spending account is known as a Health Reimbursement Account (HRA). To this account your employer will annually contribute a specific amount, and you can utilize the funds to be reimbursed for eligible health care costs, such as insurance premiums, co-pays, and other out-of-pocket expenses. This is a tax free benefit!

My recommendation for those who receive such a package in the mail is to act on the information and, if necessary, get help with understanding your choices so that you can obtain the best health insurance coverage at a cost that is in-line with your budget and medical needs.

Have you received your letter yet? What was your initial reaction? What options were you given? Are you planning to reach out to an advisor so you make the best possible decision for your situation? Let’s have a discussion.