Short answer: Employers and unions can offer retirees a Medicare Advantage or Part D plan built just for them under CMS employer group waivers (called an EGWP for drug plans); a person can be in only one Advantage or Part D plan, so enrolling in an individual plan generally ends the group plan.
Federal rules let CMS waive Part C and Part D requirements that get in the way of employer-sponsored group plans, including separate premiums and enrollment limited to the sponsor’s retirees. The employer can pay some or all of the premium and cost sharing and add its own benefits on top.
The trap: when a retiree enrolls in an individual Advantage or Part D plan, the group enrollment ends. Texas state retirees are an example: ERS says a retiree who enrolls in a different Advantage or Part D plan cannot stay in HealthSelect Medicare Advantage or Medicare Rx and is moved to HealthSelect Secondary. Some sponsors do not let a retiree who leaves come back.
Before quoting an individual plan to any retiree, ask whether they have former-employer coverage and get the sponsor’s rules in writing. EGWP coverage is itself Part D, so the employer does not send the usual creditable coverage notice for it.