Some of your retirees under sixty-five already qualify for Medicare. Your plan is paying as though they do not.
Medicare is not only an age-sixty-five program. A person under sixty-five reaches it through disability, and once they do, a retiree plan stops being the payer of first resort for them. The savings are real and so is the benefit to the retiree — but only if somebody goes looking, because nothing in the ordinary run of plan administration surfaces these people.
A person under sixty-five reaches Medicare through disability, on a clock most people read wrong.
The rules here are federal, specific and widely misunderstood — including by the plans that pay the claims. Getting the sequence right is the difference between a program that works and a memo that annoys your retirees.
Two Waiting Periods, Not One
Five months from the onset of disability before Social Security disability benefits begin, and then twenty-four months of entitlement to those benefits before Medicare starts. They run one after the other, not together, so the practical distance from onset to Medicare is about twenty-nine months. Copy and conversations that describe a single twenty-four-month wait from onset are simply wrong, and that error sets every expectation badly.
The Count Is Of Entitlement, Not Illness
The twenty-four months are months of entitlement to disability benefits, not months of being disabled. Where entitlement is established retroactively — which is common, because claims take time — the Medicare date can land earlier than anyone expects, and sometimes in the past. That is worth knowing before a plan writes off a claim period as settled.
ALS Skips Both Clocks
For amyotrophic lateral sclerosis the twenty-four-month Medicare wait has been waived since July 2001, and the five-month wait for disability benefits has been waived for approvals on or after July 23, 2020. Note the trigger on the second one is the date of approval, not the date of onset or of the application.
Kidney Failure Is A Separate Route Entirely
End-stage renal disease does not run through disability entitlement at all. Medicare entitlement generally begins with the third month after a regular course of dialysis starts, and there is no waiting period where the individual takes part in a self-care dialysis training program before that third month. Different pathway, different clock, different coordination rules.
Eligibility Is Not Enrollment
An award establishes entitlement. Medicare pays as the primary payer only for someone actually enrolled, and Part B carries a monthly premium the individual pays. So the shift is never automatic on the award, and treating it as automatic is how a plan books savings that never arrive. Somebody has to walk each person through the enrollment.
The Rules Are Not Common Knowledge
Social Security’s own published research on public understanding of its disability program found that fewer than half of adults knew eligibility is not open to everyone with a Social Security number, and only about four in ten answered a basic question about the work history required. People do not pursue a benefit whose rules they do not know they meet.
Once Medicare is primary for one of your retirees, your plan is the second payer for them.
The coordination rules for disability are narrower than most sponsors assume, and the narrowness is the whole opportunity.
Two Conditions, And You Need Both
A group plan is primary to Medicare for someone entitled on the basis of disability only where the plan is a large group health plan and the person has coverage by virtue of current employment status — their own or a family member’s. Both conditions, not either one. The size test sits inside the definition of a large group health plan: an employer of at least one hundred employees on half or more of its business days in the prior year.
A Retiree Fails The Second Condition
A retiree has no current employment status. So for a retiree entitled to Medicare on disability, Medicare pays first and the retiree plan pays second — whatever the size of the employer. That single sentence is the mechanism behind every dollar this program saves.
Below One Hundred It Never Applied Anyway
For an employer under the large-group threshold, Medicare is the primary payer for a disabled beneficiary from the start, active or retired. Smaller sponsors often carry claims for years in the belief that their plan has to pay first. The first check for a smaller sponsor is whether the carrier or administrator knows which members are entitled; if it does not, the plan keeps paying first on claims Medicare should have taken.
The Award Itself Can End Current Employment Status
Someone not actively working keeps current employment status only under a specific set of conditions, and receiving Social Security disability benefits is one of the things that ends it. So the population that moves is wider than your formal retiree list — it reaches people on extended leave whom nobody has reclassified.
Kidney Failure Runs The Other Way
End-stage renal disease is the exception that costs you rather than saves you: the group plan pays primary for up to thirty months regardless of employer size and regardless of current employment status. One dialysis claimant is a thirty-month exposure, and it is the case where this program finds nothing.
How A Plan Learns Any Of This
The information exists. CMS runs a query process through which a plan obtains Medicare entitlement and enrollment information for the people it covers, and group health plan arrangements already report quarterly under the Medicare Secondary Payer reporting rules. Whether anyone reconciles that against the eligibility file is a decision, not a capability.
Three jobs, and the middle one is the one nobody does.
This is not an audit that produces a report. It is a process that ends with named individuals enrolled in Medicare and claims paying in a different order.
Find Who Is Already Entitled
Start with the people who have already reached Medicare and whose coverage is still being coordinated as though they had not: enrolled but unknown to the plan, or known and still paid primary. This is reconciliation work against Medicare entitlement data and the eligibility file, and it is the fastest part, because nothing has to be applied for.
Find Who Would Qualify And Does Not Know
The harder half. People who became seriously ill after they stopped working are frequently eligible for disability benefits and have never pursued them, because nothing in retirement prompts the question. That means communication written for retirees rather than for claimants, targeted outreach, screening the responses, and representing the people who qualify through a claim that takes months.
Then Actually Move Them
An award on its own changes nothing. Enrollment has to happen, the carrier or third-party administrator has to be told, and the eligibility file has to reflect it or claims keep paying in the old order and get recovered later. This is the step where programs quietly fail, and it is ordinary administrative work done properly.
What this does not do, said plainly.
A program built on other people’s health and other people’s paperwork deserves a candid account of its limits. Here is ours.
It Is Slow, By Statute
About twenty-nine months from the onset of disability to Medicare for a standard claim, and a disability claim itself takes months to decide. This is a multi-year program that compounds, not a line item you can book into next year’s budget.
The Retiree Decides, Not You
It is their claim, their medical evidence and their choice. The plan can inform, encourage and provide representation; it cannot require anyone to apply, and a program that feels coercive to a retiree population will fail for reasons that have nothing to do with the rules.
Part B Costs Them Money
Enrolling means paying a monthly premium. For most people the disability income and the added coverage are worth considerably more than the premium, but that is an arithmetic question for each individual, and anyone presenting this as pure upside is not being straight with your retirees.
What The Retiree Actually Gains
Disability income they were entitled to and were not claiming. Medicare alongside the group plan. And a protection most people have never heard of: the period of disability is set aside when Social Security later computes a retirement benefit, so years of low or no earnings do not drag that benefit down. The disability benefit converts to a retirement benefit at full retirement age.
The Liability Question Is Not Ours To Answer
Fewer people on the plan and a lower projected claims stream will affect an actuarial valuation of retiree medical obligations. Whether it does, by how much, and how it is reported is a determination for your actuary and your auditor on your facts. We will bring them the data and stay out of their conclusion.
It Reduces The Cost, Not The Promise
Moving retirees to Medicare primary changes what the plan pays. It does not change what you promised them, retire the obligation, or substitute for deciding what the retiree benefit should be. It is a cost lever inside a commitment you are still keeping.
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General information about Medicare coordination and Social Security disability, not legal, tax or benefits-eligibility advice for any individual. Entitlement decisions belong to the Social Security Administration.
The rules are federal and specific, which is the good news
Ten questions employers ask before letting anyone look at their retiree population.
Is this allowed, or are we pushing people off our plan?
It is the opposite of that, and the distinction is the whole point. Nobody is being moved off anything. Federal coordination rules already say which payer comes first once someone is Medicare-eligible and no longer an active employee, and for a retiree that is generally Medicare. What we are describing is paying in the order the rules already set rather than continuing to pay first by default. The retiree keeps coverage; what changes is which payer it sits on top of.
Does this apply to our active employees as well?
No, and this is the line that matters most. For someone still actively working, the group plan is generally the primary payer – at employers of twenty or more for those Medicare-eligible by age, and at employers of a hundred or more for those eligible by disability. Offering an active employee any inducement to take Medicare instead of the group plan is prohibited. The opportunity here is on the retiree side of that line, and confusing the two is how an employer creates a problem rather than solving one.
How does someone under sixty-five become Medicare-eligible at all?
Through disability. A person receiving Social Security disability benefits generally becomes entitled to Medicare after a waiting period measured from when those benefits began – twenty-four months in the ordinary case. ALS is immediate. End-stage renal disease runs on its own separate track. Because the clock starts with the disability determination rather than with anything that happens at your company, nothing in the normal run of plan administration tells you it is running.
When should we be acting on it?
Before entitlement, not after. Enrollment in the parts a retiree needs has its own timing, and a missed window can mean a gap in coverage or a late-enrollment penalty the retiree carries permanently. That makes this a scheduling exercise rather than a one-off audit – the useful version runs continuously against the population, so people are reached in the months before eligibility rather than in the year after it.
How do you find these people without asking about anyone’s health?
You do not ask. The determination is made by the Social Security Administration, not by you, and the work is done against plan and eligibility data and the official entitlement record rather than by surveying anyone about their medical condition. That distinction is not a technicality – an employer collecting health information to drive a benefits decision creates exposure under several different statutes at once. Anything that starts with a questionnaire about diagnoses is the wrong method.
What does it do to the retiree’s own costs?
In most cases it improves them, which is why this is worth doing on the merits rather than only on the savings. Medicare paying first, with the retiree plan coordinating on top, typically produces better cover than the retiree plan carrying the full weight alone. But it is not automatic and it is not universal, so the honest version of this work models the retiree’s position as well as the plan’s, and says so where an individual would be worse off.
What if a retiree does not want to enroll?
Then they do not, and the plan pays according to the coordination rules as they actually apply rather than as anybody would prefer. That is the uncomfortable part worth understanding in advance: in some arrangements a person who declines the coverage that should be primary can find the secondary payer paying only what it would have paid on top, leaving a gap. It is a reason to communicate early and clearly, and a reason to have the conversation with the retiree rather than through a form letter.
Is end-stage renal disease handled differently?
Yes, and it is the exception most often missed. ESRD carries its own coordination period during which the group plan remains primary before Medicare takes over, measured in months from when eligibility begins rather than following the disability clock. Applying the general rule to an ESRD case gets the payment order wrong in both directions depending on timing, which is exactly the sort of error that produces recoveries and penalties later.
What does this do to our stop-loss and our retiree liability?
Both should be repriced rather than assumed. Stop-loss is priced on the claims the plan expects to pay, so a change in who pays first is a change the carrier will have a view on. On the balance sheet, a retiree medical promise is an accounting liability that reflects expected future claims, and a durable change in payment order is a change to that estimate. Neither is a reason not to do it – they are reasons to tell your stop-loss carrier and your accountants rather than to let them find out.
What is the risk if we get the order wrong?
Real, and it runs both ways. A plan that pays primary when it should have been secondary has overpaid and will usually struggle to recover it. A plan that pays secondary when it should have been primary creates an exposure of its own, with interest and penalties attached and a retiree caught in the middle. The rules are federal and specific, which is good news – they can be checked rather than argued about. CPAs and ERISA attorneys are available to clients through us for the cases that need one.
Want to know what this would find in your population? Send us your renewal, or talk it through with someone first. No cost, no obligation.
General information about Medicare coordination for retiree plans, not legal or tax advice. Plan-specific questions belong with ERISA counsel, and we will bring them in.
Medicare Maximization in Bloomfield Hills, Done by the Rules
Retiree health costs can climb when the employer plan pays claims that Medicare should pay first. It often happens because no one noticed that a retiree became eligible for Medicare. Medicare maximization in Bloomfield Hills means making sure Medicare pays its share for retirees, within the rules.
We are an independent employee benefits consulting firm, in business since 2007. We work with employers in Bloomfield Hills, Rochester Hills, Novi, Detroit and across Michigan.
Medicare Maximization
Medicare maximization is the work of lining up your retiree plan with Medicare, so each one pays in the right order. The technical term is coordination of benefits. These are the rules that decide which plan pays first (primary) and which pays second (secondary).
The biggest opportunity is often with pre-65 retirees. Some of them qualify for Medicare early because of a disability. Once they have Medicare, the retiree plan usually becomes secondary. Medicare pays first, and your plan picks up part of what is left. If no one tracks this, your plan may keep paying as if it were first.
How Medicare maximization in Bloomfield Hills works with us:
- We work with your carrier to find pre-65 retirees who may already qualify for Medicare through a disability.
- We explain the enrollment steps to those retirees in plain words.
- We make sure your carrier records who pays first.
- We review claims payment with your carrier or plan administrator and hold them to their contract.
- We bring in ERISA attorneys through the firm when a plan change needs review.
Can we move active employees onto Medicare to save money?
No. This is where employers get into trouble. For active employees, the group plan generally stays primary. Employers may not push active employees onto Medicare, or offer them a reason to drop the group plan for Medicare. Medicare maximization applies to retirees, not to people still on your payroll. We keep your approach on the right side of that line. If an active employee asks about Medicare, we give HR simple, neutral facts to share. The choice stays with the employee.
Common questions
Is Medicare maximization legal?
Yes, when it applies to retirees and follows Medicare’s rules. We do not use it to move active employees. For active employees, the group plan cannot offer an incentive to choose Medicare where it would otherwise pay first, so the line between retirees and actives is the one we check first. For retirees, Medicare paying first is the order federal coordination rules already set, with an exception during the end-stage renal disease coordination period.
Do retirees lose anything?
Usually not. Medicare pays first, and the retiree plan fills in behind it. Retirees may need to enroll in Medicare Part B, which has its own premium. The trade to weigh is the Part B premium against what the retiree plan pays once Medicare is primary, so each retiree should see the numbers before enrolling.
What if a retiree does not enroll in Medicare?
A plan written to pay second may pay only as if Medicare had paid. That can leave the retiree with a large bill. Clear plan language and early notice help prevent this. That is why notice should reach retirees in the months before they become eligible, not after. Missing the enrollment window can also bring a late-enrollment penalty on top of the gap.
Talk to us about Medicare maximization in Bloomfield Hills
Send us your renewal or book a 30-minute call. Bring a list of retirees on your plan and your plan documents, and we will take it from there. Visit us at 41000 Woodward Avenue, Suite 350 East, Bloomfield Hills, MI 48304, or call 248.370.8853.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
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