If you’re over 65 and still working full-time, you might rely on your employer’s group health coverage for yourself and your family. In the past, it was often advisable to stay on that plan and delay enrolling in Medicare, especially if your employer plan offered good coverage at a lower cost. However, recent changes to Medicare Part D set to take effect in 2025 may require you to rethink that approach.
A new Medicare rule might impact you, beginning in 2025.
Starting in January 2025, any employee over 65 who remains on an employer group health plan needs to ensure their plan’s prescription drug coverage is at least as good as what Medicare offers. Specifically, your annual out-of-pocket drug expenses cannot exceed $2,000. If your plan’s drug coverage falls short of this threshold, you could face penalties.
What does this mean for you, the over-65 worker?
Most Bronze and HSA plans, and in many cases even Silver plans, will not meet Medicare’s new drug coverage standards. This puts employees who stay on those plans at risk of accumulating costly penalties.
For every month that you stay on a non-qualified employer plan starting January 1, 2025, Part D penalties will begin to accrue. These penalties amount to 1% of the average monthly cost of a Part D plan, which is estimated at $46.50 for 2025. That means for each month, the penalty is approximately $0.46, adding up to $5.58 per year. Over five years, that totals $27.90 in penalties per month—for life. Once these penalties start, they cannot be reversed, even if you eventually enroll in Medicare.
What can you do to avoid a penalty?
As most employers offer open enrollment during this time of year, it’s essential to check with your employer to confirm whether your plan qualifies under the new Medicare rules.
Don’t wait until it’s too late! If you’re unsure whether your current plan meets the requirements, reach out to a qualified insurance broker today to review your options and avoid lifelong penalties. Contact us at Bay Area Health Insurance for personalized guidance to protect your coverage and financial well-being.
