Medicare and Other Health Insurance: Who Pays First?

If you have Medicare in addition to another health insurance plan (such as an employer group health plan), there are rules which decide who pays first. The primary payer pays the bill first, up to the limits of its coverage. The secondary payer pays any costs left uncovered by the primary payer (again, up to the limits of its coverage).

The table below is taken from the government publication Medicare and Other Health Benefits: Your Guide to Who Pays First. It provides a detailed explanation of the matter.

If you Situation Pays first Pays second Comments
Are covered by Medicare and Medicaid Entitled to Medicare and Medicaid Medicare Medicaid, but only after the other coverage (such as employer group health plans) has paid  
Are 65 or older and covered by a group health plan because you or your spouse is still working Entitled to Medicare AND     See Sect. 1
The employer has 20 or more employees Group Health Plan Medicare
The employer has less than 20 employees Medicare Group Health Plan
Have an employer group health plan after you retire and are 65 or older Entitled to Medicare Medicare Retiree Coverage  
Are disabled and covered by a large group health plan from your work, or from a family member who is working Entitled to Medicare AND     See Sect. 2
The employer has 100 or more employees Large Group Health Plan Medicare
The employer has less than 100 employees Medicare Group Health Plan
Are 65 or over OR disabled and covered by Medicare and COBRA coverage Entitled to Medicare Medicare COBRA See Sect. 3
Have been in an accident where no-fault or liability insurance is involved Entitled to Medicare No-fault or liability insurance for services related to accident claims Medicare  
Are covered under workers’ compensation because of a job-related illness or injury Entitled to Medicare Workers’ compensation for services related to workers’ compensation claims Usually doesn’t apply. However, Medicare may make a conditional payment.  
Are a veteran and have Veterans’ benefits Entitled to Medicare and Veterans’ benefits Medicare pays for Medicare-covered services. Veterans’ Affairs pays for VA-authorized services. Generally, Medicare and VA can’t pay for the same service. Usually doesn’t apply.  
Are covered under TRICARE Entitled to Medicare and TRICARE Medicare pays for Medicare-covered services. TRICARE pays for services from a military hospital or any other federal provider. TRICARE may pay second See Sect. 4

 

1. If you are 65 or older, and are covered by a Group Health Plan

If you are 65 or older and covered by a group health plan because of your current employment or the current employment of a spouse of any age, AND your (or your spouse’s) employer has 20 or more employees, then the group health plan is the primary payer, and Medicare is the secondary payer. When Medicare is a secondary payer:

  • Always sign up for Medicare Part A.
  • If you are satisfied with your group health plan, you don’t need to enroll in Medicare Part B when you turn 65.
  • You will be qualified for a Special Enrollment Period (SEP) that allows you to sign up for Medicare anytime you are still covered by the group health plan or during the 8 months following the month employer coverage ends or employment ends, whichever comes first.

If you are 65 or older and covered by a group health plan because of your current employment or the current employment of a spouse of any age, AND your (or your spouse’s) employer has fewer than 20 employees, then Medicare is the primary payer, and the group health plan is the secondary payer. When Medicare is a primary payer:

  • You should enroll in Medicare during the Initial Enrollment Period; otherwise neither Medicare nor your group health plan will cover the medical charges.
  • Many group health plans reduce their premiums if they are secondary payers

If your (or your spouse’s) employer joins other employers to sponsor a group health plan and any of the other employers have 20 or more employees, then Medicare will usually be the secondary payer. Nevertheless, your plan might ask for an exception from this rule.

You are still covered by Medicare, even if you don’t take the group health plan (either from your or from your spouse’s current employer).

Check whether the employer’s prescription drug plan is creditable (i.e. as good or better than the Medicare prescription drug plan). If it is, then you don’t need to sign up for Part D. The SEP discussed above will allow you to enroll in Part D (without any penalty) when you lose employer coverage.

Always consult with your benefits manager or the human resources department to find out how your (or your spouse’s) employer’s insurance works with Medicare.

2. You are under 65, disabled, and are covered by a Group Health Plan

If you are under 65, disabled, and covered by a group health plan because of your current employment or the current employment of a spouse of any age, AND your (or your spouse’s) employer has 100 or more employees, then the group health plan (known as a large group health plan) is the primary payer, and Medicare is the secondary payer.

If you are under 65, disabled, and covered by a group health plan because of your current employment or the current employment of a spouse of any age, AND your (or your spouse’s) employer has fewer than 100 employees, then Medicare is the primary payer, and the group health plan is the secondary payer.

3. You are covered under COBRA

COBRA is a federal law that allows you to keep your (or your spouse’s) employer’s group health plan coverage for a period of 18 months (or, in some cases, 36 months) after your employment ends or after you would otherwise lose coverage. COBRA benefits are only available to the employees of a company with 20 or more employees.

In general, the rules described in Section 1 that apply to group health plan coverage apply for COBRA coverage as well. For example, if you or your spouse are retired and have COBRA coverage, Medicare pays first.

4. You are covered under TRICARE

TRICARE is a health care program for active-duty and retired uniformed services members and their families.

In general, Medicare pays first for Medicare-covered services. TRICARE will pay the Medicare deductible and coinsurance amounts for any service not covered by Medicare that TRICARE covers.

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