California Life-Only & Accident and Health AgentAccident and Health InsuranceHard
A 70-year-old individual, eligible for Medicare, decides to continue working for an employer with more than 20 employees. The employer's group health plan is the primary payer for his medical expenses. Which federal law mandates that large employer group health plans must offer primary coverage to active employees over 65 who are eligible for Medicare?
- AEmployee Retirement Income Security Act (ERISA)
- BHealth Insurance Portability and Accountability Act (HIPAA)
- CTax Equity and Fiscal Responsibility Act (TEFRA)
- DAffordable Care Act (ACA)
Show answer & explanationAnswer & explanation
Correct answer: C. Tax Equity and Fiscal Responsibility Act (TEFRA)
The Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 established that for employees aged 65 or older who continue to work, an employer's group health plan (for employers with 20 or more employees) must be the primary payer, and Medicare would be the secondary payer. This prevents employers from shifting costs to Medicare.
Why the other options are wrong
- A. ERISA regulates employee benefit plans, including health plans, but does not establish the primary/secondary payer rules for Medicare-eligible active employees.
- B. HIPAA protects health information and ensures portability of coverage, but does not dictate primary/secondary payer rules for Medicare-eligible employees.
- D. The ACA primarily focuses on expanding health coverage, regulating insurance markets, and mandating essential health benefits, but not this specific Medicare coordination rule.
TEFRA (Tax Equity and Fiscal Responsibility Act) 1982
A federal law that established Medicare as the secondary payer for active employees aged 65 or older covered by an employer's group health plan (for employers with 20 or more employees), making the employer's plan the primary payer.
- Enacted in 1982.
- Applies to employers with 20+ employees.
- Mandates employer group plan as primary payer for active Medicare-eligible employees.
- Medicare becomes secondary payer.
Memory trick: TEFRA made employers TAKE responsibility for older workers.