The Issue
A recently acquired business owner with a 95-employee accounting firm located in Middletown, New Jersey came to us with a question. An in process acquisition included several new Medicare eligible employees and the owner wondered if the group health plan was their best option. Without any alternatives, the new employees would enroll in a high deductible health plan with a $2500 deductible that carried a monthly contribution for individual status of $360.00.
Our Solution
The staff in our Medicare division compared the group’s current benefit program and employee costs with an alternative scenario where each employee would instead enroll in Medicare. The cost analysis for Medicare enrollment revealed that for each individual, Medicare Part A would cost nothing since they had sufficient time employed with Medicare taxes paid; Part B would cost $135/month; a Medigap plan to cover deductibles and other out-of-pocket costs would be $160/month and Part D for prescription drug coverage would be $35/month. The total package would provide enhanced coverage when compared to the group program at a more affordable premium of $330 per month, per person.
The Result
The new employees welcomed the news and enrolled in the recommended Medicare package. By replacing their contribution of $360 per month for the employer sponsored health program with the $330/month premium for the Medicare programs, they not only saved $30 per month in premium but also lowered their medical deductible to just $185. The total savings for each employee was calculated to be an average of nearly $3000 annually, assuming each incurred enough expense to meet their deductible. As a bonus, the Medicare plan includes national coverage without the need for specialist referrals.