Seven Ways In, Part 1: He Turned 65, Kept the Company Plan, and Medicare Was Already First in Line
August 3, 2026
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Show Notes
Eddie and Betty's Conversation
Welcome back to The American Retirement Advisor. I'm Betty, and Eddie's here with me in the studio today, and we have something a little different for you this episode. We're starting a series, and I have to say, when I read the piece that prompted this conversation, I actually set it down and thought, how many people have gotten this wrong without ever knowing it? So the series is called Seven Ways In. It comes from Ian Schaeffer, our COO, and the whole premise is that almost nobody arrives at Medicare the same way.
Good to be here. And that framing from Ian is dead right, and it's what makes this worth a full series. The rules read like everyone turns 65 on a Tuesday, hands in their badge, and signs up. Neat and tidy. But that is not who we sit across from. We sit across from business owners, people who got laid off in their late sixties, military families, couples where one spouse is five years younger than the other. Each one of those situations has a different set of rules, and in each one there's a single detail that can make or break the whole outcome.
And today's door is the business owner. Which feels like the right place to start, because a lot of people who build something never think of themselves as having an employer.
It is. And the core question Ian opens with is the one a business owner almost always asks. If I own a business and I turn 65, does my group health plan still pay first? And the answer is: it depends. Entirely. On one number.
Twenty employees.
That is the whole line. If your company has twenty or more employees, your group plan is the primary payer. Medicare comes second. If your company has fewer than twenty, it flips. Medicare pays first, your group plan pays second.
So a business owner with, say, eleven people on staff is in a fundamentally different situation than a business owner with twenty-two, even if their health plan looks identical on paper.
Completely different situation. Same plan document, totally different rules about who pays what. And Ian pulls the language right from Medicare's own guidance on this, which I appreciated. This is not interpretation. Medicare states it plainly. Twenty or more, your group plan pays first. Fewer than twenty, Medicare pays first.
Now here's the part that made me stop reading for a second. Ian writes that this is true whether or not you have even enrolled in Medicare. How does that work?
That is the sentence that costs people money. So let me slow down on it. When Medicare is designated the primary payer under these rules, your group plan is only ever the secondary payer on those claims. And insurance companies write their plan documents to reflect that. They know what Medicare's rules say.
So the insurance company is already building that assumption in, even if you never signed up for Medicare.
Right. And there's published guidance on this for people still working past 65, and the language Ian quotes is worth sitting with. It says that some private insurance companies have rules that lower what they pay, or don't pay at all, for services you get if you are eligible for other coverage like Medicare. Not if you have it. If you are eligible for it.
That is a meaningful distinction. Because a sixty-five-year-old business owner who never enrolled in Medicare is still eligible for it.
Exactly. So the exposure is real, but Ian is careful to say it is not automatic either. It lives in the specific language of your plan document. Which is why his advice, and frankly the advice we would give too, is to call your health plan directly and ask a very short, direct question. If I am 65 and eligible for Medicare, does this plan pay as primary or as secondary on my claims?
Get it from the carrier itself, not from whoever sold you the plan.
That is verbatim from Ian's piece, and it matters. Whoever put the policy in front of you may genuinely not know. The carrier has to know, because it is in the contract.
There's a line in the article that I keep coming back to. Ian describes a business owner who assumed he was fully covered at a company of eleven people, and he says the owner usually finds out in a year when nothing happens, meaning he never finds out at all. Occasionally he finds out in a year when something does.
That is the real danger of this situation. When everything goes fine, you never get the signal that something was wrong. You go a whole year, no major claims, pay your premium, think you're good. It's only when there's a serious illness or a surgery or a hospitalization that the gap surfaces, and by then the decision has already been made.
And it's not like you can go back and un-miss those enrollment windows after the fact.
In many cases, no. Which brings us to the second cost in Ian's piece, and this one is a lot easier to put a number on. The Part B late enrollment penalty.
Walk me through this one, because I think people hear the word penalty and assume it is a one-time fee.
Very common assumption, and it is wrong. The penalty is permanent, and it goes on the monthly premium. For every full twelve-month period you could have enrolled in Part B and did not, Medicare adds ten percent to your premium. Not once. Every month, for the rest of your life, or as long as you have Part B.
So two years of missing the window means a twenty percent penalty, permanently.
Right. And Ian runs the real 2026 figures from Medicare's own fact sheet. The standard Part B premium is $202.90 a month. Add the surcharge and you land at $243.48. The math is right there on Medicare's enrollment guidance page.
Forty dollars a month. You know, when you first hear that, it doesn't sound catastrophic.
It sure doesn't. And that's the trap. Ian runs it out, and over a twenty-five year retirement, that forty dollars a month becomes more than twelve thousand dollars. For a single decision, made once, in a year nobody was paying attention.
For a mistake you would never even know you made.
And it compounds because the penalty is a percentage of the premium, so if premiums go up over the years, the penalty amount grows with them.
Now, I want to make sure we give fair time to something Ian addresses directly, because he is very clear that the answer is not always to drop your group plan and run to Medicare.
He is, and I appreciate that he says it plainly. He writes that some of the most useful meetings their advisors have end with a recommendation to change nothing at all. A business owner at a company of sixty people, with a strong plan and a spouse and adult children covered on it, is often better off staying right where they are.
Because in that case the plan is paying first anyway, and pulling the family off that coverage might cost more than it saves.
Correct. The twenty-employee line is not a verdict. It's a signal that you need to check which set of rules you're living under. For someone at a larger company with a subsidized plan, Medicare plus a supplement probably doesn't pencil out better. For someone at a smaller company paying the full loaded premium on a small group plan, Medicare plus a supplement might genuinely come out ahead.
Ian calls it arithmetic, and says it's worth doing once, properly, on paper. Which sounds simple but I'd bet most owners have never sat down and done it.
Most haven't. Ian frames it as one of his three questions for business owners approaching 65. Have you ever run the actual comparison? Your loaded group premium against Medicare plus a supplement, for you specifically, at your age, with your prescriptions. Almost nobody has seen those two numbers side by side.
Let's go through all three of those questions, because I think they're a really practical takeaway. The first was the headcount question.
Yes. Count your employees. Count full-time and part-time. Ian is specific that both count toward the twenty. And if you're close to that number, find out exactly where you land, because a company of nineteen is in a different world than a company of twenty.
Which seems like it should be easy to figure out, but I imagine for some businesses the count isn't as obvious as it sounds. Seasonal workers, contractors.
The specific rules around how different types of workers count toward that threshold is honestly something I'd want to be careful about stating precisely, because the details matter. That's a question I'd write down and bring directly to one of our advisors at American Retirement Advisors, because getting that count wrong changes the whole outcome.
Good call. So question one is the headcount. Question two was about the plan document itself.
Call the carrier. Ask directly whether the plan pays primary or secondary for an employee who is sixty-five and eligible for Medicare. And Ian makes a point of saying, get it from the carrier, not from the person who sold you the plan. The carrier is the one bound by the contract.
And three is the comparison.
Run the numbers. Your specific premium, your age, your prescriptions, against Medicare plus a supplement. Do it once, on paper, so you know what you're choosing.
Now before we get to the thing Ian teases at the end, there's one more piece in the article I want to make sure we cover, because I think it's probably the most common misunderstanding in this whole area. The eight-month window.
The Special Enrollment Period. When you eventually stop working, if you've had coverage through your employer and you were in a situation where Medicare was secondary, you get a Special Enrollment Period to sign up for Part B without a penalty. Eight months.
And the mistake people make is thinking that window starts when their coverage ends.
That is the mistake. Ian quotes Medicare's own enrollment guidance on this, and it is unambiguous. The eight-month Special Enrollment Period starts when you stop working, even if you choose COBRA or other coverage that is not Medicare. When you stop working. Not when your coverage ends.
So someone who leaves a job, picks up COBRA, and assumes the eight months starts when the COBRA runs out could already be late.
Very late. COBRA can run for a long time, and if someone spends six months on it before they think to ask about Medicare enrollment, they may have burned through most of that window without realizing it. Ian teases that this is exactly the story tomorrow, a woman who was let go at sixty-eight, handed two years of COBRA, and came to see them six months in. He says whether she made it in time is a closer call than it sounds.
That is a story I want to hear. On paper she had all the time in the world. The idea that six months in she might already be in trouble is a little alarming.
It underscores what Ian is really saying across this whole piece. These are not obscure edge cases. They are things that happen to people who are thoughtful and responsible and simply did not know the rule. The rule is just not written in plain English anywhere obvious.
And none of these pieces connect themselves. Your HR person isn't calling you to say, by the way, your employee count puts you in a different Medicare category. Your insurance broker isn't necessarily flagging the plan document language about Medicare-eligible employees. You have to go looking for this.
Or you need someone who already knows to look for it. Which is what Ian is really building toward with the whole series. Different people, different rules, one detail that decided the outcome. In every case.
The CMS name for the rule for businesses under the threshold, the Small Employer Exception, it sounds almost bureaucratic and harmless. But what it means in practice is that the usual protections that would make Medicare the secondary payer simply do not apply to you.
Ian uses the phrase from Medicare's own description. The rules that would normally put Medicare in the second position stop applying. Five words that change a lot. And he notes that a great many of the professional practices, small manufacturers, agencies, and family businesses their advisors sit down with are under that twenty employee number and have no idea it matters.
There's something about the phrase family business that lands for me. Because a lot of the people who built something small and close-knit, a dental practice, a landscaping company, a regional manufacturer, they put everything into that business. And this is one of those places where the thing you built can create a blind spot about your own coverage.
Because you've been handling your own benefits for so long, you know the plan, you trust the plan, and you assume it works the way it always has. What you don't necessarily know is that when you hit sixty-five, the rules around what that plan has to do quietly changed.
And the plan didn't call you to say so.
No. The plan did not call you.
Let's make sure listeners who are thinking about the COBRA timing piece understand what to do with that information right now, even if they're not in that situation yet.
The big thing is to keep it in mind before it's urgent. If you are a business owner approaching 65 and you think at some point I might wind down, or sell, or step back, the question of when your eight-month window actually starts needs to be on your radar before you leave. Not six months after.
Because by the time it feels urgent it might already be too late to act without a penalty.
And there may be Special Enrollment Period rules that apply or don't apply depending on your specific situation. The nuances there are genuinely something to work through with an advisor who knows the Medicare side well, because one wrong assumption about your eligibility for a penalty-free period can follow you for twenty-five years on your monthly bill.
Ian's piece is really a reminder that Medicare isn't one program with one set of rules. It's a program that lands differently depending on how you come to it.
That is the whole point of the series. Seven doors into the same building. And each door has a different lock.
I think the question listeners should be sitting with right now is simple. Do you know how many employees are on your plan? Do you know what side of the twenty-employee line you're on? Because that one number is doing a lot of quiet work in the background of your coverage.
And if the answer is I'm not sure, that is not unusual. Ian's whole point is that the people who get this wrong are not people who were careless. They just didn't know the rule existed.
So they never thought to check.
Right. And it takes one phone call. Not knowing can cost you for twenty years.
And I want to be clear about what we're saying and what we're not saying. We are not saying that every business owner under twenty employees needs to drop their group plan and sign up for Medicare tomorrow.
Not at all. Ian is careful about that. The comparison depends entirely on your situation. Your plan, your family, your prescription needs, whether your premium is subsidized. There is no universal right answer. There is only the answer that comes from doing the math on your specific numbers.
Which is why sitting down with someone who does this regularly is so much more useful than trying to piece it together from articles and government websites, as helpful as those can be.
Ian mentions at the end of his piece that the advisors at American Retirement Advisors do this comparison with business owners regularly, and there's no cost for the conversation. That is worth taking him up on if any of this is landing in your lap.
Three questions, no cost, and you leave knowing which set of rules you're actually living under. That feels like a good trade.
Beats finding out in an emergency room.
Right. We'll link to Ian Schaeffer's full piece in the show notes so you can read it yourself, and we'll be back tomorrow with part two of Seven Ways In, the woman who was let go at sixty-eight, handed COBRA, and came in six months later. Whether she made it in time, as Ian says, is a closer call than it sounds. That one is going to be worth your time. In the meantime, if anything in today's episode made you think wait, I should probably look at this, go do that. Call your carrier, count your employees, and if you want help running the numbers, our team at American Retirement Advisors is there for exactly that. We'll see you next time.