Kenji Retires in March: Medicare, the Group PPO, and Susan's 20-Month Gap
Kenji, 68, is a full-time project manager at a Honolulu engineering firm with 40 employees. His wife Susan, 63, turns 65 in 20 months; both are covered under the firm's group PPO. Kenji enrolled in Medicare Part A at 65 but declined Part B because he had employer coverage, and he never enrolled in Part D. He pays his share of the group premium through payroll. He plans to retire on March 31 next year, the firm has told him group coverage ends that day, and there is no retiree plan. Susan has no other coverage available and is in good health. Kenji asks what he and Susan should do about Medicare and about coverage for the years before Susan reaches 65.
1. While Kenji is still working, which plan pays first for his care, and was declining Part B a mistake?
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The group plan pays first. Kenji is an active employee of an employer with 20 or more employees, so the "working aged" coordination rules make the employer's group health plan primary and Medicare secondary. Filing claims through Medicare first would only create denials and delay.
Declining Part B was not a mistake - provided he follows through. Because he has group coverage based on current employment:
- He may delay Part B without a late-enrollment penalty.
- His enrollment window is a Special Enrollment Period, not the general window.
Part D: he should confirm in writing that the group PPO's drug coverage is creditable. If it is, he has no Part D late-enrollment penalty accruing while he is on the group plan - but that protection ends when the group coverage ends.
2. What exactly must Kenji do when he retires, and what are the consequences if he does nothing for a year?
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Timeline and mechanics.
- His Part B Special Enrollment Period runs eight months, beginning the month his employment ends (or the month group coverage ends, if earlier). Coverage ends March 31, so the clock starts April 1.
- He should enroll in Part B effective April 1 to avoid any gap, and enroll in Part D within 63 days of losing creditable drug coverage to avoid a Part D penalty.
- His Medigap open enrollment - the one-time six-month guaranteed-issue window - begins the month he is both 65+ and enrolled in Part B. Because he delayed Part B, that window starts now, not at 65. If he plans to buy a MedSupp policy, this is the time; after it closes, medical underwriting can apply in most states.
If he misses the eight-month window: he must wait for the General Enrollment Period (January 1–March 31) with coverage starting July 1. He would also owe the 10% Part B late-enrollment penalty for each full 12-month period he could have had Part B but did not - a permanent surcharge for a one-year delay, plus an uninsured gap he cannot retroactively fill.
3. What are Susan's realistic coverage options from April 1 until she turns 65?
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She has no Medicare option. Medicare eligibility begins at 65 absent disability or ESRD, so for the next 20 months she is an individual-market or COBRA buyer.
Option 1 - COBRA. A qualifying event (Kenji's retirement/coverage loss) gives her up to 18 months of continuation. That covers 18 of the 20 months. She pays the full premium plus a small administrative fee, keeps the same network and providers, and uses no medical underwriting. It leaves a two-month hole she must fill with a marketplace plan.
Option 2 - Marketplace plan now. ACA individual coverage is guaranteed issue regardless of health. With Kenji retired and household income dropping, she may qualify for premium tax credits - often cheaper than COBRA, though the deductible and network may differ.
Practical sequencing to raise with them: price both, confirm her physicians are in the marketplace network, and remember that COBRA is not a substitute for Medicare - when she turns 65 she must enroll on time, and dropping COBRA does not create a Medicare Special Enrollment Period.