Crowe & Associates
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Lowering Employers’ Insurance Cost With
Medicare
◦ 25% of Americans work past age 65
◦ 3 out of 5 people age 40 to 60 plan to work
beyond age 65
◦ Creates a huge cost for employers offering
health insurance benefits to employees
Crowe & Associates
◦ Average cost of group based health insurance
for someone age 65+ in Connecticut
◦ Example #1:
 Employers with 3+ enrolled
 Example plan: $25/$40 copay with $1,500 major
services deductible
 Female age 66 = $1,500 month average premium
 $18,000 annual premium
Crowe & Associates
◦ Example #2:
 Employers with 3+ enrolled
 Example plan: $30/50 copay with $3,000 major
services deductible and 30% co-insurance
 Male age 66 = $1,200 month average premium
 $14,400 annual premium
Crowe & Associates
◦ Example #3:
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Employers with 3+ enrolled
Example plan: $6,000 high deductible health plan
Female age 66 = $900 month average premium
$10,800 annual premium
◦ Rates are 20% higher for business with 1-2
employees
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◦ Health insurance cost going up every year
 Average increase is 6.6%
 Average increase in CT is 8.9%
 No realistic hope of increases going down
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◦ Average employer in CT contributes 72%
toward individual employees as of 2015
 Example costs:
 $25/$40 -$1,500 plan is $18,000 @ 72% = $12,960
in annual average employer costs
 $30/$50 -$3,000 plan is $14,400 @ 72% = $10,368
in annual average employer costs
 $6,000 HSA plan is $10,800 @ 72% = $7,776 in
annual average employer costs
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◦ Medicare as an alternative for 65 and older
active employees
 Medicare Part A and B covers 80% of medical
expenditures
 Part B costs $134 a month for most enrollees
 Medicare Part D provides coverage towards drug
costs
 Average cost is $28 to $42 a month for a drug plan
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 Confirm that employee age 65 and older has
Medicare part A (most enrolled automatically at age
65)
 Employees age 65 and older can enroll in Medicare
Part B (if not already enrolled)
 Dropping group coverage creates a special election to enroll
in part B
 Part B costs can be higher for those with higher incomes
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 The employee enrolls in a Medicare supplement
plan
 Medicare supplements cover the medical costs not covered
by Medicare A and B
 Go to any doctor that accepts Medicare anywhere in the
United States
 No referrals needed
 Coverage outside of the US on certain plans
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 Plan F supplement covers 100% of medical services
not covered by Medicare for $240 a month
 Plan N supplement covers all costs not covered by
Medicare except:
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$183 deductible
Up to $20 cost share for office visits
$50 for emergency room visits
Cost is $156 a month
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 Enroll in a Medicare Part D Rx plan
 Use the CMS plan finder website to find the best plan based
on the current prescriptions
 Premiums per month usually range from $28 to $42 a
month depending on the drug plan
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 Cost of a plan F with a drug plan
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$134 month for part B of Medicare
$240 a month for the plan F supplement
$35 a month for a drug plan
Total cost is $409 a month x 12 months = $4,908 a year
 The $25/$40 health plan with a $1,500 major
deducible costs $18,000 a year vs. $4,908 total
premium using the Medicare Supplement Plan
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 Cost of a plan N with a drug plan
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$134 month for part B of Medicare
$156 a month for the plan F supplement
$35 a month for a drug plan
Total cost is $325 a month x 12 months = $3,900 a year
 The $25/$40 health plan with a $1,500 major
deducible costs $18,000 a year vs. $3,900 total
premium using the Medicare Supplement Plan
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◦ Company funding of alternative strategy
 A number of benefit consultants suggest using a
section 105 plan for premium reimbursement
 It is suggested not to use a 105 plan due to recent changes
in regulations and compliance
 We suggest adding the extra premium to payroll or
using a Small Business HRA plan.
 Small business HRA plans are new for 2017
 Groups of 50 employees and less may utilize them
 Group must offer MEC benefits in order to offer them
Crowe & Associates
◦ Total cost examples using Medicare Plan N
 Assuming employer pays all associates Medicare
premiums
 Company paying 72% of $25/$40 - $1,500 plan
 $18,000 annual premium @ 72% = $12,960
employer cost
 The alternative would be to have the employee go
on Medicare and pay associated premium costs
 Employer pays employee additional income of
$3,900 + 10% cost of payroll expenses = $4,290
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◦ Total cost examples using Medicare Plan N
 Payroll expenses include Social Security, FICA and
workers compensation premium
 $12,960 on health plan vs. $4,290 using Medicare
strategy
 Total savings per employee per year of $8,670
 In addition to the substantial company savings, the
employee has a plan with much less out of pocket
vs. the traditional health plan.
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 Medicare Supplement average rate increase is 2.2%
per year.
 Medicare Part B average increase is 1% -2% per
year
 Much more manageable rate/premium increase for
employer to budget.
 Medicare supplement benefits do not change upon
renewal as they are standardized plans.
 No need to compare benefits from one company to
the next. Only need to make sure employee is on
the company that is offering supplement at lowest
cost.
Crowe & Associates
◦ Our agency can answer all Medicare
enrollment and benefit questions for the
employees
◦QUESTIONS?
www.CroweAndAssociates.com
[email protected]
(203)796-5403