Who Pays First: How Does Medicare Work with Other Insurance Plans?
There are over 62 million Americans enrolled in Medicare. But only 1 in 10 Medicare beneficiaries rely solely on traditional Medicare coverage, according to the Kaiser Family Foundation.
That means the vast majority of Medicare beneficiaries are getting their health coverage through more than one form of insurance, such as their employer’s group health plan, retiree coverage or Medicaid. And with multiple payers providing their health coverage, most beneficiaries will at some point face the question: Who pays first?
Figuring out the answer can be tricky, and Medicare puts the onus on its beneficiaries to know the rules. But there are some basic guidelines for when Medicare pays first and when it doesn’t, and knowing them can help you make sure your bill goes to the right place. Read through to find out about the different types of medical insurances and who will be the primary payee for your medical bills
Is Medicare a Primary Plan?
When there’s more than one type of coverage, rules governing the coordination of benefits dictate which insurer is the “primary payer,” and which is the “secondary payer.”
The primary payer — the insurance that pays first — pays up to the limits of its coverage. The secondary payer pays only if there are remaining costs that the primary payer didn’t cover.
Determining whether Medicare pays first depends on several factors, including what types of other coverage you have. You will need to tell your doctor if you have health coverage in addition to Medicare so they can make sure to send your bills to the correct payer.
It’s worth noting that the secondary payer — which may be Medicare — may not cover all remaining costs. And if your employer’s group health plan or your retiree coverage is considered the secondary payer, you may need to enroll in Medicare Part B before they foot their share of the bill.
Here’s a look at some of other insurance plans that act as primary or secondary coverage.
Group Coverage with Medicare
Retirement at age 65 isn’t for everyone. And you may have wondered: Can I have both employer insurance and Medicare?
The upshot of continuing to work after you’re old enough to qualify for Medicare is that you may be able to hang on to your employer’s health care coverage, even after enrolling in Medicare. And in many cases, two plans are better than one.
The plans can work together to pay for most of your health care expenses. It’s important to note that employers with 20 or more employees are required to offer employees ages 65 and older the same health benefits and conditions made available for employees under 65. The same holds true for coverage the employer offers to spouses.
You may be able to put off enrolling in Medicare while staying on your employer’s plan. As long as your employer has 20 or more employees, you won’t incur any payments for delayed Medicare enrollment.
Who Pays First: Medicare or Employer Plan?
Medicare pays first when:
• The employer has fewer than 20 employees and isn’t part of a multi-employer group health plan.
Medicare pays second when:
• The employer has 20 or more employees. The group health plan pays first; then the doctor or health care provider would send your bill to Medicare for secondary payment.
• The employer has fewer than 20 employees but is part of a multi-employer plan in which at least one other employer has 20 or more employees.
Retiree Coverage or COBRA:
If your former employer provides group health insurance for your after you retire from the company, this is called retiree coverage. If you have Medicare and retiree coverage, Medicare usually pays your bills first.
The same rule applies if you get a COBRA policy after you leave your job. As long as you enroll in Parts A and B, Medicare will pay first. Just make sure to sign up for Medicare Part B during the first eight months of your COBRA plan to avoid late enrollment penalties.
Medicaid:
Medicaid never pays first if you qualify for both Medicare and Medicaid. It only pays after Medicare has paid. Not all Medicare providers accept Medicaid, however, so make sure to ask in advance whether they participate in both programs so you don’t end up footing the Medicaid portion of the bill yourself.
TRICARE:
TRICARE is the U.S. military’s health care program for members of the military and their families. For those enrolled in both Tricare and Medicare, determining which will pay first depends on the military member’s status.
Tricare pays first for active-duty military, but second for inactive-duty military. Tricare also pays first for services or items from a military hospital or federal provider.
Disability insurance:
Let’s say you are under 65 and qualify for Social Security Disability Benefits because you are under 65 because of a disability. After 24 months, Medicare will automatically enroll you in Parts A and B.
In this case, Medicare becomes primary if you have group coverage through an employer that has fewer than 100 employees and isn’t part of a multi-employer plan.
End-Stage Renal Disease:
After you have had End Stage Renal Disease for 30 months, you will automatically transition to Medicare. Until then, your employer’s health plan will be your primary coverage. The same goes for retiree insurance and COBRA; Medicare becomes primary after the 30th month.
Workers Compensation:
If you suffer a work-related injury, workers compensation insurance always pays first for services related to the injury — even if you have Medicare.
Quick Reference for Who Pays First:
Here’s an easy guide to who pays first when you have Medicare along with other coverage. So what plan pays after Medicare pays?
Medicare pays first when you are:
- Age 65 or older
• Insured by a retiree coverage or COBRA
• Disabled and on a large employer’s group health plan
• On Medicare and Medicaid
Medicare pays second when you:
• Are age 65 or older and work for a large employer
• Have filed a workers comp claim
How Can You Be Sure?
Figuring out which insurer pays first can be confusing. If you have questions, you can call the Benefits Coordination & Recovery Center at (855) 798-2627, or (855) 797-2627 for those who are hearing impaired and rely on a teletype device to figure out who exactly will pay first for your healthcare bills when you have medicare and other insurances.
