Question:
Question from Anthony: Apparently, costs for my company’s health insurance are going way up in 2027. We’ve been warned to be prepared to have more money deducted from our paychecks and higher deductibles starting next year. I’m over 65. How do I know if I should stay on my plan at work or if going on Medicare Part B is best?
Answer:
Answer: This is a very important question as the Open Enrollment for most people who get their health insurance from an employer is this month.
The bottom line is that in 2026, small employer group health insurance rates rose 18% to 20%. In 2027, the average increase for small employer group plans is going to be another 20% to 25%. Increases for large employer groups, policies with 50 or more people, are 15% on average, with some as high as 70%!
When premiums go up for employers, what many do is pass on some or all the additional costs onto their employees in the form of larger paycheck deductions, higher co-pays and deductibles, or both.
With historically high premium increases on employer group health insurance over the last 2 years, this means more people than ever who are 65 or older, and still working, are going to be better off opting out of their employer sponsored health insurance and into Medicare for 2027.
There’s more to it than just what’s taken out of your check to help pay for your employer sponsored health insurance, but that’s best place to start. Medicare Part B is expected to be around $210/month next year. If the amount taken out of your paycheck per month for health insurance (don’t include dental or vision deductions) is close to or more than that figure, if it’s just you on the plan, or close to $400 if you carry your spouse, that’s a good indication going on Medicare may be the best option.
It’s unlikely you should opt out of your health insurance at work if any of the following are true:
- The amount taken out of your paycheck per month is $100 or less per person on the plan.
- If your annual Adjusted Gross Income is over $112,000 and you file as a single individual, or over $224,000 if you’re married. This is because those whose income if over those amounts pay more for Medicare, possibly double or triple than the standard $210.
- It’s a virtual certainty you want to stay on your health insurance at work if your spouse is under 65, also on the plan, and your employer pays a portion of his or her premium. This is because a spouse who qualifies for employer health coverage is not eligible for a subsidy through the Affordable Care Act (Obamacare), the only true option for those who can’t or don’t get medical insurance from an employer or the VA. A decent Obamacare plan without a subsidy for a 60-year-old is now $1,000 per month!
You can make the choice of whether to go on Medicare or remain on your employer provided health insurance very simple by allowing one of the licensed and experienced agents of The Health Insurance Store to evaluate it. There’s no charge for this service and the information we need to make the determination for you is listed below:
- The amount that is deducted from each paycheck for your health insurance.
- The plan’s deductible.
- The coinsurance percentage. This is the percentage of the bill that you’re responsible for paying after the deductible has been met.
- The plan’s annual Maximum Out of Pocket (MOOP), which represents the most money you can be billed for covered medical and prescription services.
- Is the plan a HDQHP, meaning is it eligible to be paired with a Health Savings Account?
- List of prescriptions being taken.
- Approximate annual Adjusted Gross Income.
Here are a couple of other tips that may make the decision to go on Medicare easier:
- Ask your HR person if there’s an incentive to opt out of the company health insurance. Many employers will provide a stipend of $2,000 to $5,000 per year to employees who opt out of the company plan. If they don’t currently do that, ask if they will implement something. An opt out incentive makes sense for both the employer and employee. It allows you to get help paying for some or all Medicare Part B premiums as well as the cost of a Supplement or an Advantage Plan, while saving an employer literally as much as $10,000 per year per employee who opts out. Today, the full cost of a good employer sponsored health insurance plan for a 65-year-old is often $12,000 to $18,000 per year!
- If you’re married and you and your spouse are both on the work plan, find out what the cost is if just you remain on it. Because it’s common for an employer to cover 70% to 100% of the cost for the employee, but just 50% or less for a spouse, it often makes sense for you, the employee, to stay on the plan while opting your 65-year-old, or older, spouse out.
- You can drop your employer sponsored health insurance and enroll in Medicare as well as a Supplement or Advantage Plan anytime during the year! You’re not limited to your employer’s Open Enrollment or the Medicare Annual Enrollment Period!
If you have any questions regarding this topic or any other related to Medicare, or if you would like to make an appointment for a no-cost consultation, give the office a call, 724-603-3403 or email me personally.