Frequently Asked Questions Regarding Medicare and the Marketplace
August 1, 2014
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including the essential health benefits and actuarial value requirements and the non-
discrimination provision at 45 CFR §147.104(e). Therefore, the ACA market reforms do
not prohibit retiree-only plans
from paying at a different rate or not at all if a member
becomes eligible for other insurance coverage that would have paid as primary, even if
the member chooses not to enroll in the other coverage. MSP rules do not apply to
retirees who do not have current employment status.
EXAMPLE: Ms. Casserly has retiree-only coverage through her former employer. She
turns 65 and becomes eligible to get Medicare, but she has not enrolled in Medicare. She
sees her health care provider for a service that her retiree insurance covers and that
Medicare would have covered as well. The health care provider charges $150 for the
service. Medicare doesn’t pay anything since Ms. Casserly has not enrolled in Medicare.
The retiree health plan’s contract indicates that Ms. Casserly has a $20 copay for this
service. However, it also indicates that if Ms. Casserly becomes eligible for other
coverage (whether she enrolls in it or not), the plan will pay at a lesser rate. In this case,
the retiree health plan’s contract says it will only pay 50% of the fee leaving Ms. Casserly
with a $75 cost-sharing obligation.
D.9. An individual who receives coverage through his employer’s self-insured group health
plan for active employees is eligible for Medicare due to turning age 65 but is not enrolled
in Medicare. The employer has fewer than twenty employees. Can the employer change the
payment level for or refuse to pay for otherwise covered services for which Medicare would
have paid as the primary payer had the individual been enrolled in Medicare?
Yes, if the employer’s group health plan contractual terms allow the employer to pay at a
different rate (or not at all) and Medicare would have been primary (i.e., when the
employer has fewer than twenty employees). A self-insured group health plan offered by
an employer is not subject to the essential health benefits and actuarial value
requirements or various non-discrimination provisions of the Affordable Care Act and its
implementing regulations. As such, those ACA requirements do not prohibit an employer
health plan from paying at a different rate or not at all if a member becomes eligible for
other coverage that would have paid as primary to the employer, even if the member
chooses not to take that other coverage.
EXAMPLE: Mr. Ludwig has coverage through his employer. His employer has fewer
than twenty employees. He turns 65 and becomes eligible to get Medicare, but he hasn’t
enrolled in Medicare. He sees his health care provider for a service the employer’s
contract covers and that Medicare would have covered as well. The health care provider
charges $150 for the service. Medicare doesn’t pay anything since Mr. Ludwig doesn’t
have Medicare. The self-insured employer’s contract indicates that Mr. Ludwig has a $30
copay for this service. However, it also indicates that in the event Mr. Ludwig becomes
eligible for other coverage (whether he enrolls in it or not), the employer will pay at a
See FAQ dated October 12, 2010 which addresses the exemption from the Affordable Care Act for group health
plans with less than 2 current employees, which can be found here: https://www.cms.gov/CCIIO/Resources/Fact-
Sheets-and-FAQs/aca_implementation_faqs3.html.