Medicare and the State Farm
Group Medical Plan
Inasmuch as this article has limited application, let me save you some of your valuable time, by suggesting that if you and/or your spouse are NOT approaching age 65 and near eligibility for Medicare, you need not read any further.
Approximately three months before you are to attain age 65 you will receive a form letter from the State Farm 'Associate Services Center' in Bloomington. There is some very important information in the letter regarding the 'identity' of the State Farm Group Medical Plan that you should bring with you when you make your appointment to see a Social Security Administration representative at your local service office. More specifically, that State Farm agents and their dependents are not covered under a "Large Employee Group Health Plan". State Farm agents are independent contractors, covered under a "Multi-Employer Health Plan". THIS DISTINCTION IS IMPORTANT! And, while we know there are other ways to apply for your Social Security Benefits, (internet, telephone, etc.) we do recommend a personal visit where you can engage in the simplicity of give and take in 'good old conversation' with a live human being.
The important issue here is that prior to January 1, 2005, at age 65 Medicare, became your primary health coverage provider. Your State Farm Group Medical Plan, became (for you) a secondary provider, or supplemental coverage. The Group Medical Plan would still be the primary health provider for your spouse, and dependents.
The consequence of that change of Medicare becoming your primary health provider was that there would be a significant reduction in your State Farm Group Medical Plan monthly premiums.
For example, an agent prior to January 1, 2005, before attaining age 65, who had Medical - Option B would be paying a monthly premium of $103.66. An agent plus one dependent, with Medical — Option B would be paying $217.70 monthly.
Upon attaining age 65, when Medicare became the primary provider (ONLY FOR THE AGENT), the agent's monthly premium was reduced to $68.26; about a 35% reduction, in recognition of the risk that was to be assumed by Medicare.
Likewise, when the dependent attained age 65, and Medicare then became the primary provider for BOTH THE AGENT AND DEPENDENT, there should have been a commensurate reduction in the monthly premium for the dependent at that time, to reflect the obvious reduction in risk to the State Farm Group Medical Plan. But, oddly enough, State Farm said there would be only one reduction in the premium.
Meanwhile, what actually happened was that the dependent's monthly premium, which was $114.04 ($217.70 less $103.66) before the agent attained age 65, also got reduced from $114.04 to $75.08; also about a 35% reduction. While this is puzzling because there had been no reduction in risk assumption on the dependent, since the State Farm Group Medical Plan was still the primary provider for the dependent's coverage, their explanation was that "we only make one reduction of the premium and it takes place when the agent attains age 65".
This all changed as of January 1, 2005 because Medicare has redefined when they become the "primary" health provider. Essentially, they are saying that if the agent is still an active agent when he or she attains age 65, the State Farm Group Medical Plan remains your "primary" health provider. According to a State Farm advisory, this rule also applies to spouses of active agents who are 65 or older, regardless of the age of the member.
State Farm has, however, further indicated that the premiums to be paid for calendar year 2005 by an age 65 active agent, will remain as though Medicare remained your primary health carrier for the Option selected (no increase or decrease). Your premiums for 2006, however, will reflect that Medicare IS NOT your primary carrier (meaning an increase from the past year premiums).
As always, we are not attorneys or accountants, we're State Farm agents just like you, so we recommend that you run this information by your accountant, your attorney or your tax advisor BEFORE taking any action or making any election regarding your health insurance coverage.