Three Plans, One Child, and a Layoff in August
Elena and Rob divorced four years ago. Their son Sam, 9, lives with Elena, who has sole custody. Elena covers Sam under the group medical plan of her employer, a 40-employee firm where she works full time. Rob, who has since remarried, covers Sam under his own employer's plan and also under his new wife's plan. Sam needs $9,000 of services in April, and all three plans are still in force. Elena turns 65 in June and intends to keep working; she is enrolled in the group plan, has never enrolled in Medicare, and asks whether she should sign up now. In August, Elena is laid off and her group coverage ends.
1. In what order do the three plans pay Sam's $9,000 claim?
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Use the NAIC coordination-of-benefits rule for a child of divorced or separated parents. The birthday rule does not apply here, because the parents are not married to each other. The order is: the plan of the parent with custody (Elena), then the plan of a stepparent married to the custodial parent (none in this case), then the plan of the noncustodial parent (Rob), then the plan of the noncustodial parent's spouse (Rob's new wife).
So Elena's plan is primary and must process the claim under its own rules first. Rob's plan then considers the balance, and his wife's plan pays last. Correctly coordinated, Sam's out-of-pocket should be close to zero: a secondary plan cannot pay less than it would have paid as primary, and it takes the primary plan's payment into account when calculating what it owes.
2. Should Elena enroll in Medicare now, and what happens when she is laid off in August?
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Her employer has 40 employees, so it is a large group (20 or more) and the group plan is primary to Medicare for an employee in current employment; Medicare is secondary. She should enroll in premium-free Part A when she turns 65 - there is no downside - and she may delay Part B without penalty, because she has group coverage based on current employment.
The late-enrollment penalty (10% of the Part B premium for each full 12 months of delay) only bites if she goes without creditable coverage. When she is laid off in August, she gets a Special Enrollment Period: eight months from the end of the group coverage to enroll in Part B, and two months for Part D. She should not use COBRA as a substitute for enrolling - COBRA is not coverage based on current employment, so it neither extends the SEP nor becomes primary to Medicare. She should enroll in Part B during the SEP and then coordinate with COBRA, a Medigap policy, or a Part D plan.
3. After the August layoff, how can Rob get Sam enrolled mid-year in his employer's plan?
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Loss of Elena's group coverage is a HIPAA special enrollment event. Rob has 30 days from the date Sam loses eligibility - not necessarily the date coverage formally terminates - to request mid-year enrollment in his employer's plan, and coverage must be effective no later than the first day of the month after the request is received. Because the triggering event is loss of other group coverage, Sam cannot be hit with a new pre-existing condition exclusion or waiting period if he enrolls inside that window.
If the family misses the 30 days, Sam waits for the plan's annual open enrollment. If the lost coverage had been Medicaid or CHIP rather than employer coverage, the window would be 60 days. Elena should obtain written confirmation of Sam's termination date, since the 30-day clock is measured from it.