Section 17: How Medicare Affects Medical Benefits Under the Plan

Medicare is a three-part program. The first part is officially called “Hospital Insurance Benefits for the Aged and Disabled” and this part is commonly referred to as Part A of Medicare. The second part is officially called “Supplementary Medical Insurance Benefits for the Aged and Disabled” and this part is commonly referred to as Part B of Medicare. The third part is Medicare plus Choice, or Medicare Part C and generally involves coverage under one of the Medicare HMO (Health Maintenance Organization) offerings for participants who live in a geographic area service by a Medicare HMO and who choose to be covered by a Medicare HMO. Part A of Medicare primarily covers hospital benefits, although other benefits are also provided. Part B of Medicare primarily covers physician’s services, although it, too, covers a number of other items and services.

Typically a person becomes eligible for Medicare upon reaching age 65. Under certain circumstances a person may become eligible for Medicare before age 65 if the person is a disabled worker, disabled widow or dependent widower or has chronic renal disease.

You should be aware that even if you do not choose to retire and do not begin receiving Social Security monthly payments at age 65, you are eligible to apply for both Parts A and B of Medicare anyway. Since Part A of Medicare is ordinarily free, you should apply for it as soon as you are eligible. You are required to pay a monthly premium for Part B of Medicare. If you are not yet receiving Social Security benefits, you must pay this premium to the Social Security Administration. If you are receiving Social Security Benefits, the premium will be deducted from your monthly check.

17.1 Coordination of Your Plan Benefits with Medicare

Coordination of your benefits under the Welfare Fund and under Medicare is different, depending on whether you are an active or a retired employee eligible for Medicare.

This Welfare Fund is the primary plan responsible for payment of your benefits and your dependents’ benefits if you are an eligible active employee. This means that if you are an active employee and you are also covered by Medicare, when you or your dependents incur covered medical expenses, the Fund will pay benefits first and then Medicare may (but probably will not)
pay some of the remaining expense not covered by the Fund.

However, when you are eligible for Medicare and you retire, Medicare is primary. This means that the medical expenses covered under this Fund will be reduced by the benefits Medicare pays or would have paid if you had applied for Medicare when eligible and paid the premium.
Therefore, it is essential when you retire that you enroll in Medicare Part B coverage within seven months of the first day of the first month in which you leave covered employment. If you do not enroll for Part B coverage within this seven-month period, you may enroll during the “general enrollment period.” This “general enrollment period” occurs between January 1 and March 31 of each year and coverage begins the July 1 thereafter. It is important for you to enroll as soon as you are eligible because your monthly premium will be assessed a 10% increase for each full 12 months that you are not enrolled in Part B coverage.