January 19, 2006

Q:  I am 66 years old, still working, and have health insurance from my employer. Do I need to sign up for a Medicare drug plan? If I do not sign up now, will I have to pay a penalty if I sign up in 18 months when I retire? My employer does not offer retiree health benefits.  -- Eleanor

Dear Eleanor:

If you are working, and have good health insurance from your employer, you probably do not need to sign up for a Medicare prescription drug plan at this time.

According to the official Medicare and You 2006 handbook, you can keep your employer plan as long as it is at least as good as the standard Medicare drug benefit. When you retire, you can then enroll in a Medicare prescription drug plan. You will not have to pay a late enrollment premium penalty as long as you join a Medicare plan within 63 days after your employer coverage ends.

In general, benefits offered by employers are more generous than the standard Medicare drug benefit, so there are good reasons to stick with your employer’s health plan. But there are exceptions, so it is important to determine whether your employer plan is at least as good as the Medicare drug benefit before making a final decision for 2006.

Fortunately, you don’t need to answer this yourself. You should have received a letter from your employer that confirms if the prescription drug coverage offered under their health plan is at least as generous as the Medicare drug benefit.

If your employer indicates that their prescription drug benefit is not as generous as the standard Medicare drug plan, then you should consider signing up for a Medicare prescription drug plan for 2006. Otherwise, you may face a penalty for late enrollment.  Be sure to confirm all of this information with your employer before making a final decision.

This column was prepared by the Kaiser Family Foundation, an independent, non-profit private foundation based in Menlo Park, Calif., that is not affiliated with the Kaiser Permanente health plan. Do you have questions about the new Medicare drug benefit? Send your questions to Medicare Q and A. The Kaiser Family Foundation. 1330 G St., NW. Washington, DC  20005 or MedicareQ@kff.org. 

(c) 2005, Knight Ridder/Tribune News Service.

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