Should Employees Stay With Large Group Plans?

There's an Entire Chapter On This & 2025 Will Get Tougher

Recent Newsweek Article Is Very Unfortunate

My view is this is likely my best video on Medicare. I’m trying =).

Sometimes, the message of articles in the popular media are partially wrong, which can create undue anxiety. Here are the facts, my video commentary is for paid subscribers, because of the proprietary nature of my comments. I am very concerned about an unknowing audience wrongly understanding my messages regarding complicated topics.

Part D Is Going to Have An Out Of Pocket Limit

For those with expensive medications, this will be a HOME RUN for you, financially speaking. The hard cap will be $2,000 a year, no exceptions. However, there will be ripple effects, that’s the point of this article.

Prescription Drug Benefits (Large Group Plans)

Generally, they meet Medicare’s standards, technically called Creditable Coverage. The problem is that with a $2,000 hard cap on out of pocket expenses, it means that large employer plans will also need to meet this standard (perhaps). This is very technical¹, but the bottom line is that in order to meet this much higher standard, and still remain to be at least as good as Medicare’s standard, something has to give.

• Carriers can meet the standard, employers purchase that higher standard, the premiums will be notably higher. The issue is that while the employee’s premium may be 'relatively stable,’ the spouse and family premiums may rise dramatically, in order to compensate.

• Employers may choose a weaker set of prescription drug benefits, but then the Medicare-eligible employee and/or spouse may be exposed to the Part D Late Enrollment penalties.

Someone Out There Will Get Blindsided, I Am Certain

• An employer is going to choose to NOT meet Medicare’s creditable coverage standard. That means a Medicare-eligible beneficiary will face the Part D Late Enrollment Penalty.

• An employer is going to reduce health benefits in order to compensate for higher prescription drug benefits that meet the creditable coverage standard.²

• An employee is going to inefficiently choose to remain on the employer-sponsored plan, wasting a lot of money.

1. Nerds can read about it here.

2. The CMS could “maybe” force large employers to comply, that is unknown at this time.