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How Medicare Cost Sharing Impacts Your Small Business Health Plan

September 13, 2023

Your small business health plan can be one of the most impactful factors in employee retention for your organization, but it's important to recognize how solutions like Medicare cost sharing can affect your overall plan. Here’s a closer look at the ways Medicare cost sharing relates to the size of your business and your bottom line.

Does Medicare Use Cost Sharing?

Medicare cost sharing is available for businesses, but the way it works depends on how your business is organized. If your business has 20 or more employees, the cost of healthcare can be split between a group health plan and Medicare, with the group health plan being the primary provider. That means the group health plan will pay first, with Medicare being billed for what's left after the coverage limitations.

For businesses with fewer than 20 employees, Medicare pays before the group health plan does, provided the employer isn't part of a multi-employer group health plan in which one of the other employers has 20 or more employees. Note that these same rules apply to those who are covered under a spouse's healthcare plan through their employer.

Medicare Cost Share Plans and Your Bottom Line

With a Medicare cost sharing plan, the total amount your business pays for health coverage can vary. Overall, Medicare tends to be cheaper than any private insurance for businesses and employees because we all contribute to Medicare coverage through our taxes. By implementing Medicare into your health plan, you could cut costs in more ways than one.

In addition to Medicare generally being cheaper than private insurance, you can use it as a way to cover things beyond the limitations of the private health plan through cost sharing. That means you may not need to opt for a private plan that is as comprehensive as you would need without Medicare coverage. In fact, some health plan providers already include Medicare coverage in bundle plans, especially in more accident-prone industries like construction.

Why Regulations Are Important

Having health plans may not be enough to appeal to the best workers in your industry unless you also abide by the legal regulations regarding Medicare and any employer-provided health plan. Every employee has the right to be treated with courtesy, dignity and respect, and they are protected from discrimination based on race, color, national origin, disability, age, religion or gender identity.

A major regulation to keep in mind regarding Medicare and healthcare in general is the right to privacy. Every employee has the right to keep their personal and health information private. People receiving healthcare also have the right to file appeals in response to denied coverage and have their information available to them in their preferred language. If your business is working with Medicare, it is important that you abide by all regulations to remain legally compliant. 

Optimize Your Benefits

Offering benefits is a great way to attract talent, but healthcare can be a complicated endeavor. With our help, you can optimize your benefits offerings while leaving us to do all the heavy lifting. Contact our team today to get started.

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