Medicare 2026

Before Trading Employer Retiree Coverage for a Medicare Plan: What to Check

Leaving a job after decades often comes with a familiar perk: retiree health benefits. If you're nearing Medicare age — or already enrolled — and your former employer or union offers coverage, the decision to keep it, layer it with Medicare, or drop it for an individual Medicare plan deserves careful thought. Some choices can't be undone, and the fine print matters.

Start with one question: what does your retiree plan say?

Retiree plans aren't standardized. Two neighbors can retire from different companies and get wildly different rules. Before you touch anything on the Medicare side, request the plan documents and talk to your former employer's or union's benefits administrator. Ask three specific questions:

1. If I enroll in a Medicare Part D drug plan on my own, do I lose my retiree medical coverage? What about my spouse or dependents? 2. If I join an individual Medicare Advantage plan, does the retiree coverage end, stay in place, or coordinate as secondary? 3. If I drop the retiree plan now, can I ever get it back?

Medicare itself warns that adding a stand-alone Medicare drug plan can cause some retirees to lose employer or union benefits — not just drug coverage, but non-drug health coverage too — for themselves and their family. In some situations, joining an individual Medicare Advantage plan triggers the same loss; in other situations, the retiree coverage keeps working alongside it. There's no single rule. The answer lives in your plan documents.

If your employer offers its own Medicare plan (an EGWP)

Many employers and unions sponsor what's called an Employer Group Waiver Plan — an EGWP — which is a Medicare Advantage and/or Part D plan available only to that group's members. CMS says EGWP enrollees get the same Medicare rights and protections, including grievance and appeal processes, as people in individual Medicare Advantage and Part D plans.

If your employer plans to group-enroll you in an EGWP, the plan or sponsor must send a notice at least 21 days before enrollment takes effect, spelling out how to opt out and what happens if you do. Read it carefully. CMS specifically warns that opting out can have serious consequences, including loss of retiree benefits. If you're unsure, call the benefits administrator before the deadline — not after.

Also remember: you can be in only one Medicare Advantage plan at a time. If you're in your employer's EGWP and sign up for a different Medicare Advantage plan on the open market, you'll be disenrolled from the employer's plan — and the retiree coverage attached to it may be gone for good.

The one-way-door problem

This is the single most important thing to understand: Medicare warns that if you drop employer or union coverage, you may not be able to get it back. And if you're already in a Medicare Advantage or Medicare drug plan, you can only drop it to take employer or union coverage when the employer or union allows it — not on your own schedule.

So before you switch, ask what reinstatement options exist, if any. Many plans have none.

If the retiree coverage ends — your Special Enrollment Period

If you lose employer or union coverage — whether it's active retiree coverage, COBRA, or an EGWP — you qualify for a Special Enrollment Period to join a Medicare Advantage plan or a Medicare drug plan. It lasts two full months after the month your coverage ends. Mark the date your coverage ends and count forward; missing this window can mean waiting for Annual Enrollment (October 15 – December 7, 2026, for coverage starting January 1, 2027) and possibly a late enrollment penalty.

Don't forget IRMAA

If your income is above the thresholds Social Security uses, you pay an income-related monthly adjustment amount (IRMAA) for Part D. This surcharge is billed directly to you by the federal government — even if your former employer or retirement system pays your plan premium for you. CMS specifically lists "confusion about paying Part D IRMAA directly to the government" as a reason retirees have accidentally disenrolled from employer plans. Expect the bill, budget for it, and pay it on time. The 2027 IRMAA brackets haven't been announced yet; CMS typically releases them in the fall along with the Part B figures.

Comparing the two paths, neutrally

Keeping retiree coverage and comparing it against individual Medicare options is a personal calculation. Some trade-offs to weigh:

• Keeping employer/union retiree coverage (possibly with Original Medicare or an EGWP): May cover a spouse or dependents; may offer benefits you can't buy individually; but rules, premiums, and networks are set by the plan, and the coverage can be changed or ended by the employer.
• Original Medicare plus a stand-alone Part D plan (and possibly a Medigap policy): Broad provider access nationwide; predictable federal rules; separate premiums for each piece; Medigap pricing and underwriting rules vary.
• An individual Medicare Advantage plan: Bundles hospital, medical, and usually drug coverage; networks and extra benefits vary by plan; may conflict with retiree coverage.

Neither path is "better" in the abstract. The right fit depends on your doctors, prescriptions, budget, family coverage, and travel patterns.

Program facts worth knowing for 2027

• The Part D out-of-pocket cap is $2,400 in 2027 (it was $2,100 in 2026).
• The maximum Part D deductible any plan may charge in 2027 is $700.
• The Part D base beneficiary premium for 2027 is $41.33 — a national figure used to calculate the late enrollment penalty; actual plan premiums are set plan by plan.
• Social Security announced a 3.6% COLA for benefits payable beginning January 2027.
• The 2027 Part B standard premium and deductible, and the 2027 IRMAA brackets, have not been announced; CMS releases them in the fall.

Where to go next

For official rules, enrollment periods, and the plan finder, visit Medicare.gov or call 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048, 24 hours a day, 7 days a week. Before you make a change that could close a door behind you, get your retiree plan's rules in writing — then decide.