Should I Stay on My Spouse’s Group Coverage or Switch to Medicare?

By Janet Johnson

Many people choose to work past 65, and they’re faced with the decision: should I stay on my employer’s group plan or switch to Medicare?

This decision also faces spouses – perhaps you’re on your spouse’s group plan, but you’re over 65. You have the option to leave that group plan and enroll in Original Medicare. But should you?

I recently helped two clients with this dilemma and am happy to share the decision-making process with anyone else facing a similar situation.

Employer Group vs. Medicare

Both of the clients I recently met with were referred to me – referrals are the best compliments! Both were on their spouse’s employer group insurance, and they weren’t sure if they should keep it or switch to Original Medicare with a supplement and a drug plan.

I recommend pulling a Ben Franklin and doing a full pros and cons chart. Put your spouse’s group plan on one side and Medicare with a supplement and drug plan on the other. We want to compare everything – the cost and the benefits.

Either bring me your group insurance paperwork or make sure you really understand how it works before you proceed.

If you want me to help you with this decision, we’ll need a letter from your spouse’s company stating whether or not the drug coverage is credible. You can get that from HR. If it's credible, it becomes a little less attractive to leave it. If it’s not, it’s a little more attractive to switch to Medicare. 

Above all, I never want to lessen a person's coverage.

Weighing the Pros and Cons

Both of these clients were husbands, and their wives were still working. The hardest part of this entire decision is realizing that the employer group insurance benefit can cost you more than it's worth.

So many people don’t want to leave the employer group plan, because they see it as a benefit – a perk of the job. But you have to ignore that part of it, because giving up that benefit and switching to Medicare might actually save you money.

$3,000 Out-of-Pocket Maximum and $300 Premium

For the first client, we ran the numbers, and his wife’s group plan offered him a $3,000 out-of-pocket maximum, and it came with a $300 premium.

After seeing this, we didn’t really care if the drug coverage was credible – it made obvious sense to switch to Medicare with a supplement and a Part D drug plan.

They could save so much money doing that, and they didn’t give up any coverage. In fact, they improved their coverage!

We effectively went from a $3,000 maximum to a $198 maximum by switching to a Medicare Supplement Plan G. They were also able to save a substantial amount in premium, even when you factor in the Part D drug plan premium.

Non-credible Drug Coverage and $1,500 Out-of-Pocket Maximum

In the other case, the wife’s insurance was not considered credible drug coverage. So, that client already had to pay for a Medicare Part D drug plan in addition to the group premium. That group plan offered a $1,500 out-of-pocket maximum.

Again, we were able to switch to a Medicare Supplement Plan G and improve the coverage from a $1,5000 maximum to $198 maximum. The client was already paying for a Medicare Part D drug plan, so that made the decision that much easier.

Happy Clients

Both clients are happy they’re saving money, but they’re also getting better coverage because their out-of-pocket maximum is less. 

They’re both on a Plan G now, so their out-of-pocket maximum is effectively $198 in 2020.

Conclusion

If you find yourself in a similar situation, at least check to see what a traditional Med Supp would cost you! 

List out the pros and cons and compare them:

• What are you paying in premium?
• Is the drug coverage credible?
• What’s your out-of-pocket maximum?
• What would a Medicare Supplement + a Part D drug plan cost you in premium?

I can run the numbers on the Medicare Supplement and Part D premiums, so please call us at 217-423-8000 to schedule an appointment.

Our job is to make sure you have the best coverage possible for the lowest cost possible. If it doesn’t make sense to switch to Medicare yet, you simply stay where you are, and we check back annually to ensure nothing has changed.

About Janet Johnson

Janet Johnson has been helping seniors choose their health insurance for over 30 years with Sams/Hockaday & Associates.

“Janet was very helpful in researching and finding a reliable supplement to my Medicare. I have been very pleased with the coverage and promptness in payment of bills. Also Janet helped find a reliable Prescription Part D plan.” –Customer since 2014

“It was nice to be able to find that someone, we actually know and trust, could be of help to us when we found ourselves in a position of needing to find health insurance. Janet has taken the lead and also taken all of the worry out of setting us up with what we need and what is in our best interest.” –K.S., Customer

“Janet was always helpful and knowledgeable. She gave us very pertinent information in a timely manner. We would recommend her to anyone.” –R.E, Customer