It’s fairly common for individuals to have both Medicare benefits and separate health insurance coverage, especially if they are just nearing retirement age and have some carryover employer-provided health insurance at the same time they become eligible for Medicare. In this situation, either Medicare or your other health insurer will take primary and secondary roles when it comes to who pays first for your covered benefits.
The insurance plan that’s considered the primary insurer covers your claim up to your coverage limits, then the secondary insurer comes into play, potentially picking up the total or a portion of your remaining medical costs. Learn more about when your Medicare coverage will be considered primary and when it functions in a secondary role to better understand how your insurance will help pay for your benefits.
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What Does Primary and Secondary Insurance Mean?
A primary health insurance provider is the insurer that is billed and paysfirst when a covered individual incurs medical bills. This insurer pays claims as if it were the only health insurance coverage in place. Secondary insurance comes after and may offer additional coverage beyond what’s covered by the primary insurance policy. It kicks in only after the primary insurance has paid the maximum allowable amount.
For example, you may have health insurance coverage through your employer and also have additional coverage through your spouse’s employer-sponsored policy. The process for determining which insurer is obligated to pay first is known as coordination of benefits (COB). This process prevents duplicate payments, which can help keep healthcare and prescription drug coverage affordable.
When Is Medicare Primary Insurance?
In many cases, when you have Medicare coverage, it acts as your primary insurance. However, there are some exceptions. Here’s a look at some common scenarios where Medicare acts as the primary insurer.
Medicare is your only insurance
When Medicare is your only form of medical insurance, it acts as your primary insurance coverage. In this case, after you have paid your deductible and any required copays or coinsurance costs, you can be compensated for the covered medical expenses you incur up to Medicare’s limits.
You have Medigap
When you have Medicare and a Medigap policy, Medicare acts as your primary insurance and Medigap is secondary. Since Medicare does not cover 100% of your healthcare expenses, a Medigap policy can help reduce your financial obligation by covering the total or a portion of your out-of-pocket costs. For example, depending on your specific Medigap policy, Medicare pays for covered benefits first, then Medigap pays second to reimburse your for benefits like the copays and coinsurance from Medicare.
You have Medicaid
Medicaid is a state-run federal assistance program for low-income Americans. Some individuals are dual-eligible for both Medicare and Medicaid coverage. In this case, Medicare acts as primary insurance and Medicaid is secondary. This means that your Medicaid coverage does not pay anything until you have received the full amount of compensation available under your Medicare coverage.
You have employer-sponsored insurance but your company has fewer than 20 employees
If you are eligible for Medicare coverage but are still employed and have employer-sponsored coverage, your primary insurer depends on the size of the employer.
If your employer has fewer than 20 employees and is not a part of a multiple-employer or multi-employer group health plan, then Medicare is the primary insurance and your employer-sponsored policy is secondary. However, if the employer has more than 20 employees or is a part of a multiple-employer or multi-employer group health plan, then the employer-sponsored policy is primary and Medicare is secondary.
You have retiree insurance from your former employer
When your employer allows you to continue your group insurance coverage after you’ve retired, this is known as retiree coverage. In this case, Medicare is your primary insurance and your retiree coverage is secondary. Since retiree coverage typically includes prescription drug coverage, you may be able to use this instead of purchasing a Medicare Part D plan.
You have COBRA coverage
The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides continued insurance coverage for workers and their families who would otherwise lose access to their group health insurance plans due to job loss, reduction in hours, a transition between jobs, divorce, death, or other life changes.
When you have Medicare coverage because you are aged 65 or older, Medicare acts as your primary insurance coverage, and COBRA is secondary. However, if you are younger than 65 years old and eligible for Medicare, COBRA is your primary insurer while it is in place.
You have TRICARE coverage as an inactive-duty military member
TRICARE is a government-managed healthcare program exclusively for military service members, retired military members, and their families. If you are retired or not on active duty, then Medicare is primary. In this case, TRICARE may pay additional expenses as a secondary insurance carrier.
You have End-Stage Renal Disease (ESRD) and Medicare
Individuals who have end-stage renal disease may receive early Medicare coverage if both of the following applies:
- Your kidneys have stopped working
- You have had a kidney transplant or need regular dialysis
And if at least one of the following applies:
- You have worked the required time under Social Security, the Railroad Retirement Board (RRB), or as a government employee
- You are eligible for or are already receiving Social Security or Railroad Retirement benefits
- You are a dependent child or spouse of a person who meets either of the previously listed requirements
If you have Medicare coverage only because ESRD and have a group healthcare plan, Medicare is secondary to the group plan during a coordination period, which lasts for 30 months. This is true regardless of the number of employees and whether you’re currently employed or retired. If Medicare terminates because you have a kidney transplant or stop dialysis and you later need Medicare again due to ESRD, a new 30-month coordination period begins.
You are under 65 but eligible for Medicare due to disability
Individuals with certain disabilities are eligible for Medicare before they turn aged 65. To receive this benefit, you must receive Social Security disability benefits for 24 months, unless you have Amyotrophic Lateral Sclerosis (ALS — Lou Gehrig’s disease) or End Stage Renal Disease (ESRD).
If you also have a large group health plan — which means your employer has 100 or more employees or a multi-employer or multiple employer plan — then the group plan is primary and Medicare is secondary. If the plan has fewer than 100 employees and is not a multi-employer or multiple employer plan, Medicare is primary and the group plan is secondary.
When Is Medicare Secondary Insurance?
There are some cases when Medicare acts as a secondary insurance, only picking up remaining costs after the primary coverage has paid its maximum amount. Here are a few examples:
You have employer-sponsored insurance and your company has 20 or more employees
If you’re covered by Medicare and you’re still working for a company that has 20 or more employees, your group insurance plan acts as the primary insurer. As long as you’re still covered by the group plan, Medicare only comes into play after your group coverage has paid its maximum amount.
You have workers’ compensation
If you’ve had a work-related accident or illness and are receiving workers’ compensation benefits, then your workers’ comp coverage serves as primary insurance for services related to the workers’ compensation claim. In some cases, if the workers’ compensation insurance provider denies your claim for 120 days or longer, Medicare may make a conditional payment, which must be repaid if the claim is ultimately paid by your workers’ compensation.
Medicare can also act as secondary insurance for excess costs if they are for Medicare-approved services. For illnesses or injuries that are not related to your workers’ compensation claim, Medicare acts as the primary insurer.
You have TRICARE coverage as an active-duty military member
For active-duty military members, TRICARE pays first and Medicare acts as a secondary insurer. Also, when an active or inactive military service member receives services or items from a federal healthcare provider or military hospital, TRICARE takes on the role of the primary insurer.
You were in an accident that activated no-fault or liability insurance coverage
If you’ve been injured in an accident and are eligible to receive no-fault or liability insurance, this coverage pays out first and Medicare pays second. If the no-fault or liability coverage denies payment for your medical bill or it determines that it’s not liable for covering your medical expenses, Medicare may take over as the primary insurance coverage, but only for Medicare-covered services. It’s important to note that in this scenario, you’re still responsible for paying your deductibles, copayments, coinsurance, and the cost of any services that are not covered by Medicare.
Can You Have Private ACA Insurance and Medicare?
Generally, it’s illegal for someone who knows you are covered by Medicare to sell you an Affordable Care Act (ACA) Marketplace insurance plan. However, you may end up having both coverages in place if you were already covered by an ACA plan before you became eligible for Medicare.
Once you’re enrolled in Medicare, you do not have to drop your ACA plan, but many people do. If you decide to keep your ACA coverage, you lose any subsidies you may have had and must pay full price for your coverage. If your price does not automatically change right away, you may have to pay the extra subsidies back when you file your federal income tax return. Although you’re able to keep your current ACA plan if it was already in place when you became eligible for Medicare, you cannot get a new marketplace policy later.
Who Alerts Medicare to Your Other Health Coverages?
When you have another form of coverage in addition to Medicare, your insurance carrier is responsible for notifying Medicare when it is the primary provider. This helps ensure the right coverage pays your expenses and prevents duplicate payments.
When Medicare is your primary coverage, it is your responsibility to request that claims be submitted to Medicare for your covered services. Medicare has a coordination of benefits (COB) program that helps ensure payments are made correctly. This includes the use of a Benefits Coordination and Recovery Center (BCRC), which collects information regarding your healthcare coverage and retains it as part of your Medicare records. It’s important to inform the BCRC about any changes in your coverage and make sure your healthcare provider knows that you have other coverage in addition to Medicare.
What Should You Do When Your Other Health Coverage Changes?
If you have changes in your employment or other circumstances that may alter your health insurance coverage, it’s important to notify Medicare. This can help ensure the correct payment information is on file with Medicare so your claims are paid correctly and on time.
You may be able to do this by completing a Medicare Secondary Claim Development Questionnaire, which Medicare sends out when a claim is submitted or secondary coverage has been reported. You can also contact the Benefits Coordination and Recovery Center at 1-855-798-2627 (TTY: 1-855-797-2627).
Should You Delay Medicare Enrollment?
Medicare Part A is typically premium-free as long as you’ve worked for at least 10 years, so there is generally no need to delay this coverage. However, Medicare Part B comes with a monthly premium. If you’re eligible for Medicare but are happy with your current insurance coverage, you may wonder whether you should delay making the change so you can avoid this extra cost. While it may be possible to do so while you have other coverage, there are some important facts to consider.
First, if you are not currently covered by an employer-sponsored insurance policy, delaying Part B enrollment could result in high out-of-pocket expenses for medical bills. Second, when you decide it’s time to enroll in Part B coverage, you may be subject to a late-enrollment penalty. This adds an extra 10% to your premium for every 12-month period when you were eligible for coverage but did not enroll. The penalty remains a part of your premium for as long as you have Medicare coverage.
Delaying enrollment in a Medicare Part D (prescription drug) plan can also create a late-enrollment penalty, which remains a part of your premium for the lifetime of the plan. This applies if you did not have “creditable” prescription drug coverage from another source while you delayed enrolling in a Part D plan.
The bottom line is that while waiting to enroll in Medicare could save you some premium costs in the short term, delaying enrollment may not make financial sense in the long run.