In some cases, if you join a Medicare drug plan, you will automatically lose all of
your employer retiree health coverage - and not just your employer prescription drug coverage. However, in some cases, Medicare Part D coverage will not automatically replace your employer health plan coverage. Important warning:
You should not join a Medicare Part D plan until you are sure how a Medicare Part D plan affects your retiree coverage. Remember that you are not required to join a Medicare Part D plan and most times a Medicare plan will not work together with other healthcare coverage (with a few exceptions such as VA or TRICARE drug coverage).Historical note:
Back in late-2005
and 2006, this was a common problem where people with employer coverage were trying to add one of
the newly-introduced Part D plans to their existing employer drug
coverage plan and suddenly found that they had a Medicare Part D
prescription drug plan, but had lost all of their employer healthcare
coverage - not just the employer drug coverage - but all of their
employer's healthcare coverage.
On the other hand, in some cases, your retiree plan will work with Medicare to provide your prescription drug coverage.
For example, an employer or union might want its retirees to join a Medicare drug plan, and then the employer or union will provide additional coverage to supplement the Medicare drug plan. (This is similar to the way that employers and unions often provide health coverage to supplement Medicare doctor and hospital benefits.)
Some employers and unions will make special arrangements with a particular Medicare drug plan, while others will provide coverage that supplements any Medicare drug plan their retirees choose.
The total amount of drug coverage from Medicare plus this employer or union supplement may be as good as or better than the drug coverage previously provided by the employer or union alone - and therefore, be considered "creditable" prescription coverage for purposes of Medicare Part D late-enrollment penalty
Your employer (or the plan that administers your retiree drug coverage) should be sending you information about how your retiree health or drug coverage will be affected if you join a Medicare plan. This information will also tell you how your retiree drug coverage compares to the new Medicare prescription drug coverage.
If your retiree drug coverage will stay the same, and the coverage is as good as Medicare coverage, you can stay with your current coverage now, and you won’t have to pay a penalty if you later decide to switch to Medicare drug coverage.
However, if you qualify for Extra Help
to pay for Medicare drug coverage, it is possible that you could get better coverage if you join a Medicare drug plan.
(additional source: U.S. Department of Health & Human Services)