New Medicare Rule May Impact Seniors Working Past 65
A new Medicare rule starting January 1, 2025, could force seniors who delay joining Medicare to switch health insurance plans or face significant penalties. Many seniors over 65 continue to use their employer’s health plan instead of Medicare, but changes under the Inflation Reduction Act may introduce new challenges.
Who Does It Affect?
Currently, seniors avoid late penalties for Medicare Part D if their employer’s plan offers coverage comparable to Medicare's prescription drug plan. However, from January 1, 2025, employer plans might no longer qualify as credible coverage if they don’t cap out-of-pocket costs at $2,000. This is because the new Part D will have an out-of-pocket maximum set at $2,000, making some employer plans insufficient.
Most employer group plans have higher combined health and prescription out-of-pocket maximums. This means that plans exceeding $2,000 will not qualify, subjecting seniors to late enrollment penalties.
Understanding the Late Enrollment Penalty
The late enrollment penalty applies if, after the initial enrollment period, you have 63 or more days without Medicare drug coverage or an employer-provided credible drug coverage plan. The penalty is 1% of the national base beneficiary premium ($34.70 for 2024) for each month without coverage and is added to your monthly Part D premium permanently. We anticipate that the national base will increase in 2025, making the monthly penalty higher. Once this penalty is applied, it stays on for life.
What Seniors Need to Do
Seniors should act now to avoid these penalties. Insurers must notify Medicare-eligible customers if their drug coverage is credible. Most employer plans have open enrollment later in the year. If this is your case, contact MR Insurance Solutions for a free consultation. We’ll help you compare your company’s 2025 plan with Medicare’s offerings, ensuring you make the best decision for your health and finances.
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