Jane Dotson
Medicare is a health insurance program provided by the US federal government, specifically for people over 65. There are two main ways to get your Medicare coverage: Original Medicare and Medicare Advantage. If you have Medicare and other health insurance, each type of coverage is called a payer. The primary payer pays up to the limits of its coverage, then sends the rest of the balance to the secondary payer. This means that when choosing secondary insurance for Medicare, it is important to consider what your primary insurance is and what costs it covers.
| Characteristics | Values |
|---|---|
| Primary payer | The insurance that pays first, up to the limits of its coverage |
| Secondary payer | The insurance that pays second, covering any costs not covered by the primary payer |
| Medicare | Pays for Medicare-covered items and services |
| U.S. Department of Veterans Affairs (VA) | Pays for VA-authorized items or services in a VA or non-VA facility |
| Tribal health plan | If you have a tribal health plan, Medicare pays first and the tribal plan pays second |
| Medicare Advantage | Medicare Advantage Plans include Part D coverage |
| Medicare Supplement Insurance (Medigap) | Extra insurance to help pay your share of costs in Original Medicare; generally requires Part A and Part B to buy a policy |
| Employer coverage | Medicare Secondary Payer rules apply to employer coverage |
| Marketplace coverage | Cannot be used to lower Medicare out-of-pocket costs or in place of Medicare Part B |
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What You'll Learn
Understanding primary and secondary insurance
When it comes to health insurance, it's important to understand the difference between primary and secondary insurance. This is especially relevant if you have Medicare and are considering additional coverage.
Primary Insurance
The primary insurance is typically the policy that pays out first. When you receive healthcare services, the primary insurance will cover the costs up to the limits of its coverage. This means that if you have medical expenses that exceed the coverage limit, the remaining balance will need to be paid by another source. In most cases, the primary insurance will be Medicare if you are enrolled in it. However, there are certain situations where another insurance may be designated as the primary payer. For example, if you have group health coverage, retiree coverage, or are covered under workers' compensation for a job-related injury, these insurances may take precedence as the primary payer.
Secondary Insurance
The secondary insurance comes into play when the primary insurance doesn't cover all the costs. It pays for any remaining balance that the primary insurance doesn't cover. It's important to note that if the secondary insurance also doesn't cover all the costs, you may be responsible for paying the remaining amount. Medicare can act as a secondary payer in certain situations. For instance, if you have coverage through a tribal health plan, Medicare may pay second. Additionally, if you are on active duty and have TRICARE coverage, Medicare typically pays second for Medicare-covered services.
Choosing Secondary Insurance for Medicare
When choosing secondary insurance for Medicare, it's important to consider your specific needs and preferences. Here are a few options:
- Medicare Advantage Plans: These are offered by private companies and provide an alternative to Original Medicare for health and drug coverage. They often include Part D prescription drug coverage.
- Medicare Supplement Insurance (Medigap): This is extra insurance that helps pay for your share of costs in Original Medicare. It may also offer coverage for expenses incurred while travelling outside the US. However, it typically doesn't cover long-term care, vision, dental, hearing aids, or prescription drugs.
- Employer or Union Coverage: If you have coverage through your employer or union, it may serve as secondary insurance. However, certain conditions may apply, and you may need to enrol in Medicare Part B for them to pay.
- Medicare Drug Plans: If you require additional drug coverage, you can join a separate Medicare drug plan. These plans cover a range of brand-name and generic prescription drugs, but you can't use them for drugs covered by the Department of Veteran Affairs.
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Medicare and VA benefits
If you have VA benefits and Medicare, you can be enrolled in both plans at the same time. However, Medicare and VA benefits rarely work together. VA benefits will not pay for Medicare cost-sharing (deductibles, copayments, coinsurances). Medicare does not pay for any care received at a VA facility. To use your VA benefits, you must visit a VA doctor or facility. In some cases, the VA will cover care at a non-VA facility if it's pre-authorized.
If you decide to enroll in Medicare Part B, you should do so during your Initial Enrollment Period (IEP). Enrolling in Part B provides you with the flexibility of getting health care outside the VA system. You may qualify for programs to help pay the Part B premium and Medicare cost-sharing. Remember that you can keep your VA health benefits to get coverage for health care services and items not covered by Medicare, such as over-the-counter medications, annual physical exams, and hearing aids.
If you delay signing up for Medicare Part B and then need to sign up later because you lose your VA health care benefits or need more choice in care options, you’ll pay a penalty. This penalty gets bigger each year you delay signing up—and you’ll pay it every year for the rest of your life. If you sign up for Medicare Part D (coverage for prescription drugs), you’ll be able to use it to get medicine from non-VA doctors and fill your prescriptions at your local pharmacy instead of through the VA mail-order service. There’s no penalty for delaying Medicare Part D as long as you enroll when you’re first eligible or within 63 days of when you no longer have VA health care or other creditable prescription drug coverage.
If the VA authorizes services in a non-VA hospital, but does not pay for all the services you get during your hospital stay, Medicare may pay for Medicare-covered services the VA does not pay for. If you chose not to enroll in Medicare and keep your VA coverage, you will not have health insurance for facilities outside the VA health system.
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Medicare and employer insurance
If you have Medicare and other health insurance, each type of coverage is called a "payer". The "primary payer" pays up to the limits of its coverage, then sends the remainder to the "secondary payer". If the "secondary payer" doesn't cover the remaining balance, you may be responsible for the rest of the costs.
Medicare is the primary payer if your company has fewer than 20 employees. However, Medicare becomes the secondary payer if your employer is part of a group health plan with other employers who have more than 20 employees. In this case, your group health plan is the primary payer, and Medicare pays out only after your employer's plan has paid its portion.
If you have employer coverage and are approaching 65, you should ask your employer if you need to sign up for Part A (Hospital Insurance) and Part B (Medical Insurance). If you don't sign up, your job-based insurance might not cover the costs for services you get. Once you stop working (or lose your health insurance), you have an 8-month Special Enrollment Period (SEP) to sign up for Medicare or add Part B to existing Part A coverage. During this time, you won't face a late enrollment penalty.
If you're under 65 and eligible for Medicare because of a disability, you're not required to sign up until you turn 65. But if you're still receiving group health insurance coverage at that time, the same rules apply.
Medicare and the U.S. Department of Veterans Affairs (VA) cannot pay for the same items or services. Each time you get healthcare or visit a provider, you must choose which benefit to use. Medicare pays for Medicare-covered items and services, while the VA pays for VA-authorised items or services in a VA or non-VA facility.
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Medicare and Marketplace coverage
If you have Medicare and other health insurance, each type of coverage is called a "payer". The "primary payer" pays up to the limit of its coverage, and the "secondary payer" covers any remaining costs not covered by the primary payer.
Medicare Secondary Payer rules apply if you have health coverage from an employer through the SHOP Marketplace based on your or your spouse's current job. If you're paying a premium for Part A (Hospital Insurance), you can drop Part A and Part B (Medical Insurance) and get a Marketplace plan instead. However, it's important to note that Marketplace coverage doesn't lower your Medicare out-of-pocket costs and isn't used in place of Part B.
If you want coverage that helps pay your out-of-pocket costs in Part A and Part B, you can buy a Medigap policy, which is extra insurance you can purchase from a private health insurance company. Generally, you need to have Original Medicare (Part A and Part B) to buy a Medigap policy. In most states, Medigap policies are standardized and named by letters, like Plan G or Plan K. The benefits in each lettered plan are the same, regardless of the insurance company. The price is usually the only difference between policies with the same letter sold by different companies.
If you don't buy a Medigap policy within six months of getting Part A and Part B, you may face difficulties purchasing a policy, or you may have to pay more. You can also add Medicare drug coverage (Part D) or join a Medicare Advantage Plan to get extra benefits like vision, hearing, and dental. These "bundled" plans typically include Part A, Part B, and sometimes Part D.
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Medicare Supplement Insurance (Medigap)
Medicare Supplement Insurance, also known as Medigap, is extra insurance provided by private companies to help pay for out-of-pocket costs in Original Medicare. Medigap policies are standardized, and you can choose a plan that suits your needs, with each plan offering the same benefits regardless of the insurance company. The price is usually the only differentiating factor between policies offered by different companies.
To be eligible for Medigap, you generally need to have Part A (Hospital Insurance) and Part B (Medical Insurance) of the Original Medicare plan. It is important to note that Medigap policies do not cover certain services, such as long-term care, vision, dental, hearing aids, private-duty nursing, or prescription drugs. However, some Medigap policies provide coverage when travelling outside the U.S.
It is recommended to purchase a Medigap policy within six months of enrolling in Part A and Part B to avoid paying higher premiums or facing enrollment restrictions. If you are under 65, you may face limitations in purchasing a Medigap policy or incur higher costs.
When considering a Medigap policy, it is advisable to compare the benefits and costs of different plans to make an informed decision. You can also seek guidance from your local State Health Insurance Assistance Program (SHIP) to receive free personalized health insurance counselling.
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Frequently asked questions
A secondary payer is an insurance company that pays the remainder of the balance of a service after the primary payer has paid up to its limit of coverage.
Medicare is a federal health insurance program for people over 65 or with qualifying disabilities.
If you have Medicare and other health insurance, Medicare may be your secondary insurance. The insurance that pays first is usually the primary payer.
You can choose from Medicare Supplement Insurance (Medigap), coverage from a former employer or union, or Medicaid. Alternatively, you can join a Medicare Advantage Plan, which offers extra benefits like vision, hearing, and dental.
