Employer Group Waiver Plans (EGWPs) For Retirees
Employers that offer retiree coverage can use Medicare Advantage or Part D plans built just for their retirees. These employer group waiver plans, or EGWPs, work under CMS waivers. Here is how they work and what employers should weigh.
What An EGWP Is
Employer-Only Plans
EGWPs are Medicare Advantage and Part D plans offered exclusively to employer or union group health plan members who are Medicare eligible, often called 800 series plans because of how they are numbered in CMS systems. Employers should confirm with their advisers whether this type of arrangement fits their retiree population.
Built On Waivers
CMS may waive or modify requirements that hinder the design, offering or enrollment in employer-sponsored group plans. Requirements apply unless specifically waived or modified. The practical effect is that rules can differ from individual Medicare plans, so ask the carrier or administrator to explain what has been waived for your arrangement.
Retiree And Spouse Enrollment
Enrollment is restricted to those eligible through the employer or union plan, including spouses and dependents where the plan allows. Eligibility rules should be written clearly in the plan documents and shared with retirees, so there is no confusion about who can join and when. Counsel can review the language.
Ways Employers Can Offer One
Contract With A Plan Sponsor
Employers can purchase customized coverage from a Medicare Advantage organization or a Part D plan sponsor. Benefits are typically negotiated privately. Because terms are negotiated, compare benefits, cost and renewal terms across the proposals you receive, and ask each to explain how pricing is set.
Direct Contract With CMS
Employers or unions can contract directly with CMS to become the plan sponsor. This takes significantly more administration. That extra administration includes meeting program requirements and ongoing compliance duties directly, so employers should weigh it carefully with their advisers. Counsel can help frame the decision.
Employer-Sponsored Enrollment In Individual Plans
Employers can also arrange coverage through individual Medicare Advantage or Part D plans, with some waivers applying. Coverage must be employment-based. This approach involves more than one plan, so ask an adviser how communication, enrollment and any employer payments would work for your retirees.
What To Weigh Before Moving Retirees
Employment-Based Coverage
Membership in an association by itself does not give enough of an employment connection to qualify as employment-based coverage under CMS rules. Employers considering a group arrangement should confirm eligibility with counsel before promising or advertising coverage to retirees or members. Keep the analysis on file.
Compare Carefully
Compare benefit design, network, retiree communications and the effect on the employer’s retiree plan obligations before changing coverage. Put the comparison in writing for decision makers, and include cost trends over several years, since the first-year price may not tell the whole story.
Retiree Communications
Retirees are Medicare beneficiaries and need clear notices. Involve counsel and your advisor in the transition plan. Plan the timing of notices, meetings and call support well before the effective date, and keep copies of what was sent. Retirees often have questions about prescriptions and doctors.
Frequently Asked Questions
What does EGWP stand for?
Employer Group Waiver Plan.
Who can enroll in an EGWP?
Medicare-eligible members of the employer or union plan, and spouses and dependents where the plan permits.
Can any group join?
No. Coverage must be employment-based, and membership in an association alone does not qualify.
Do EGWPs follow Medicare rules?
Yes, except where CMS has specifically waived or modified them.
Can an employer contract directly with CMS?
Yes, but it carries much heavier administration than buying from a plan sponsor.
Is this legal advice?
No. This page is general information, not legal or tax advice. Rules change, so confirm current requirements with your attorney or tax advisor.
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Laws and rules referenced
42 C.F.R. § 422.106 and § 423.458(c) — Medicare Advantage and employer group waiver plans: coordination with employer coverage and CMS waivers for employer-sponsored plans.
42 U.S.C. § 1395y(b)(1) and 42 C.F.R. § 411.172 — Medicare pays second to a group health plan for working aged employees of employers with 20 or more employees.
This page is general information, not legal or tax advice. Rules change and facts matter, so confirm your situation with counsel or a qualified advisor.
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