Your group members and their covered dependents become entitled to Medicare when they reach age 65 or sustain certain disabilities. Federal statutes and regulations such as TEFRA/DEFRA, ensure that both active employees and spouses who are age 65 and over have the choice to retain their group health insurance or to choose Medicare as their primary coverage. These laws also stipulate your responsibilities in notifying members of their choices.
Note: OBRA references are not intended to offer a full analysis of the legislation.
Group Coverage as Primary Coverage for the Working Aged—20 or More Employees
If your group employs 20 or more people, you must allow your Medicare-entitled members and their spouses who are age 65 or over to retain their group coverage as their primary insurance, with Medicare as the secondary payer. If members over age 65 reject the group coverage, Medicare becomes the primary payer.
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Group Coverage as Primary Coverage for the Working Aged—20 Employees or Less
Groups with fewer than 20 employees are not eligible to have Empire coverage as primary for Medicare-eligible members. If your group employs 100 or more people, and a disabled member continues to be actively employed, or a disabled person is the dependent of an actively employed group member, the group's coverage will remain primary under Federal OBRA laws and Medicare will provide secondary coverage.
Any eligible group member or dependent who is not subject to the paragraphs above and who is Medicare-eligible may receive the benefits of the member's contract reduced by any benefits available under Medicare. This reduction in benefits applies even if the eligible member or dependent fails to enroll in Medicare or does not claim the benefits available under Medicare.
Empire requires an Enrollment/Change Form for every member and member's spouse who is age 65 or over to ensure correct and expeditious claims adjudication.
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Primary Coverage for Individuals with Permanent Kidney Failure
Group health plans are required to pay primary benefits during the first 30 months of a member's eligibility or entitlement to Medicare if they have been diagnosed with end-stage renal disease (ESRD). After 30 months, Medicare becomes primary and the group must continue to provide secondary benefits.
Any plan coverage, including retirement plan coverage, is subject to this provision. However, if a person becomes entitled to Medicare benefits based on age or disability and later acquires ESRD-related eligibility or entitlement and the plan was not required to pay primary under the working aged or disability provisions, Medicare retains primary status.
You must notify your group members or their eligible dependents of their options as soon as they reach age 65 or otherwise become Medicare-eligible. The member or dependent must complete an Enrollment/Change Form and submit it to your benefits office. You, in turn, must submit this completed Enrollment/Change Form to the membership and billing address listed in the "Contact Us in Writing" section of this handbook as soon as the group member or eligible dependent becomes Medicare-eligible. The following legislation affects the rights of your Medicare-eligible active group members to choose your group's coverage as primary.
Omnibus Budget Reconciliation Act of 1981 (OBRA 1981)
Under OBRA 1981, your active group members and/or their eligible dependents who become Medicare-eligible due to ESRD can designate your group coverage as primary. These members can retain your group's coverage for a specified period under federal law.
Under OBRA 1986, if your group includes 100 or more employees, your active group members and/or eligible dependents who become Medicare-eligible due to causes in addition to ESRD can designate your group coverage as primary.
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Medicare as Primary Coverage for the Working Aged
If your group employs 20 or more people, Medicare-eligible group members who are actively employed and their dependents have the right to choose Medicare, instead of your group's coverage, as primary. If they choose Medicare, they cannot receive secondary coverage under your group's contract or receive Medicare-related coverage through your group. They may, however, apply for Empire's Direct Payment coverage designed to supplement Medicare benefits. Call your Empire representative for more information. Federal regulations prohibit Empire from selling Direct Payment Medicare Supplement policies outside New York State. Anyone living outside New York State who is converting to a Direct Payment Medicare Supplement contract should contact his/her local Blue Cross and/or Blue Shield Plan immediately.
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Depending upon your group's arrangement, your Medicare-eligible retirees may receive Medicare as primary coverage, Medicare Carve-Out coverage or other group Medicare related coverage. As soon as retirees or their eligible dependents become Medicare eligible, the covered individual should complete an Enrollment/ Change Form and submit it to your benefits office, along with a copy of the member's or dependent's Medicare card. This completed Enrollment/ Change Form should then be submitted to Membership and Billing.
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If your group's coverage includes Medicare Carve-Out, Medicare will be the primary payer for retirees and/or their covered dependents who become entitled to Medicare due to reaching age 65 or sustaining certain disabilities. As the secondary payer, Empire reimburses the Medicare-eligible group members and/or their eligible dependents according to your group's contract limitations, reduced by what Medicare paid or would have paid if the Medicare-eligible member had enrolled in or applied for Medicare benefits. Medicare will not provide primary benefits for your Medicare-eligible members who have elected your group's coverage as primary under the provisions of OBRA 1981 and OBRA 1986. As an active member who is Medicare-eligible and not eligible for the group's primary coverage, the member may receive the benefits of the contract reduced by any benefits available under Medicare. This applies even if the member fails to enroll in Medicare or does not claim the benefits available under Medicare. It is therefore advisable that you encourage members to purchase Medicare Part B coverage.