Jeffrey Wade
Medicare is a federal health insurance program for people over 65 or with specific disabilities. It can work alongside other insurance plans, such as employer-provided health insurance, Medicaid, or TRICARE, a program for military members and their families. When an individual has Medicare and another form of insurance, one insurance is the primary payer, paying medical costs first, while the other is the secondary payer, covering any remaining balance. Medicare may be either the primary or secondary payer, depending on the situation and the specific insurance plan it coordinates with. For example, Medicare is the primary payer for retired federal employees with Federal Employees Health Benefits (FEHB) and those with fewer than 20 employees, while it is the secondary payer for active federal employees with FEHB and companies with more than 20 employees.
| Characteristics | Values |
|---|---|
| Medicare as primary payer | If the employer has less than 20 employees, if you are a retired federal employee, if you are not on active duty, if you are under 65 and entitled to Medicare based on disability, if you are a federal employee receiving workers' compensation and determined unable to return to duty, if you are an annuitant and Medicare was the primary payer before you became eligible for Medicare Part A due to ESRD, if you are an annuitant covered by FEHB, Medicare, and Medicaid |
| Medicare as secondary payer | If the employer has more than 20 employees, if you are an active federal employee, if you are on active duty, if you are an annuitant with Medicare, TRICARE, and FEHB coverage, if you are an annuitant with Medicare and TRICARE coverage |
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What You'll Learn
Medicare and other insurance
If you have Medicare and another form of health insurance, such as a group health plan, retiree coverage, or Medicaid, each type of coverage is called a "payer". The order of payment is called "coordination of benefits". The "primary payer" pays up to the limits of its coverage, after which the remaining balance is sent to the "secondary payer". If the "secondary payer" doesn't cover the remaining balance, you may be responsible for the remaining costs.
Medicare may be either the primary or secondary insurer, depending on the situation. For example, if you are on active duty and have Medicare, TRICARE pays first for Medicare-covered services or items, and Medicare pays second. If you are not on active duty, Medicare pays first, and TRICARE may pay second. If you get items or services from a military hospital or clinic, or any other federal healthcare provider, TRICARE pays, and Medicare usually doesn't pay for services from a federal healthcare provider or other federal agency.
It is important to inform your doctor and other healthcare providers if you have coverage in addition to Medicare. This will help them send your bills to the correct payer and avoid delays. If the insurance company doesn't pay the claim promptly, your doctor or healthcare provider may bill Medicare. In this case, Medicare may make a conditional payment to pay the bill, and then recover any payments the primary payer should have made later.
If you have questions about who pays first, or if your coverage changes, you can call the Benefits Coordination & Recovery Center.
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Primary and secondary payers
When you have Medicare and another type of insurance, one insurance will be the primary payer and the other will be the secondary payer. The primary payer is the insurer that pays a healthcare bill first, and the secondary payer covers the remaining costs, such as copayments or coinsurances.
Medicare is often the primary payer, which means it pays first, and another insurance plan pays some of what's left. For example, if you have an X-ray bill of $100, the bill would first be sent to your primary payer, who would pay the amount agreed upon by your plan. If your primary payer was Medicare, Medicare Part B would pay 80% of the cost and cover $80. Typically, you would be responsible for the remaining $20. If you have a secondary payer, they would pay the $20 instead.
The order of payment is called "coordination of benefits". The primary payer pays up to the limits of its coverage, and then sends the rest of the balance to the secondary payer. If the secondary payer doesn’t cover the remaining balance, you may be responsible for the rest of the costs.
There are a few common situations where you might have a secondary payer alongside Medicare. For example, if you have insurance coverage from your job, military benefits, or another source, Medicare will usually be the primary payer and your other insurance will be the secondary payer. If you are over 65 and still working, whether Medicare or your employer's insurance is the primary payer depends on the size of your company. If your employer has 20 or more employees, Medicare is generally the secondary payer. If your company has fewer than 20 employees, Medicare will be the primary payer.
Medicare Secondary Payer (MSP) is the term used when Medicare does not have primary payment responsibility. This occurs when another entity has the responsibility for paying before Medicare. For example, if you are on active duty and have Medicare, TRICARE pays first for Medicare-covered services, and Medicare pays second.
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Medicare's coordination of benefits rule
When you have Medicare and another form of insurance, Medicare can be either your primary or secondary insurer. The "primary payer" pays up to the limits of its coverage and then sends the rest of the balance to the "secondary payer". If the "secondary payer" doesn't cover the remaining balance, the patient may be responsible for the rest of the costs. This order of payment is called "coordination of benefits".
Coordination of Benefits (COB) allows plans that provide health and/or prescription coverage for a person with Medicare to determine their respective payment responsibilities. It ensures that claims are paid correctly by identifying the health benefits available to a Medicare beneficiary, coordinating the payment process, and ensuring that the primary payer pays first. The COB process also provides the True Out of Pocket (TrOOP) Facilitation Contractor and Part D Plans with the secondary, non-Medicare prescription drug coverage that it must have to facilitate payer determinations and the accurate calculation of the TrOOP expenses of beneficiaries.
The Benefits Coordination & Recovery Center (BCRC) takes action to identify the health benefits available to a beneficiary and coordinates the payment process to prevent mistaken payments of Medicare benefits. The BCRC does not process claims, nor does it handle any GHP-related mistaken payment recoveries or claims-specific inquiries. The Medicare Administrative Contractors (MACs), Intermediaries, and Carriers are responsible for processing claims submitted for primary or secondary payment.
If the insurance company doesn't pay the claim promptly (usually within 120 days), your doctor or other provider may bill Medicare. Medicare may make a conditional payment to pay the bill and then recover any payments the primary payer should have made later.
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Medicare and employer insurance
The size of the company you work for determines whether you'll face penalties for not enrolling in Medicare when you're eligible. If your employer has fewer than 20 employees, you must sign up for Medicare to avoid a late enrollment penalty for Part B. If your employer has 20 or more employees, you can delay signing up without any late enrollment penalties. If you're under 65 and eligible for Medicare due to a disability, you're not required to sign up until you turn 65.
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". If the "secondary payer" doesn't cover the remaining balance, you may be responsible for the rest of the costs. Medicare may make a conditional payment to pay the bill and then later recover any payments the primary payer should have made.
If you're still receiving group health insurance coverage when you retire and give up your employer health benefits, you'll have a special enrollment period of eight months to enroll in Part A and B. During this time, you won't face a late penalty. Although it isn't recommended, you may decide to decline Medicare entirely. If you do so, you must withdraw completely from any Social Security or Railroad Retirement Board (RRB) benefits you receive, and you'll be required to repay any benefits you received up to that point.
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Medicare and Medicaid
Medicare is a federal health insurance program for people over 65, younger people with disabilities, and those with End-Stage Renal Disease. It is the primary insurance for those who are enrolled, but it can also act as secondary insurance in certain circumstances. For example, if you are on active duty and have Medicare, TRICARE pays first for Medicare-covered services, and Medicare pays second.
Medicaid, on the other hand, is a joint federal and state program that helps cover medical costs for certain low-income people, families, children, pregnant women, the elderly, and people with disabilities. Each state has its own Medicaid program with its own eligibility requirements and benefits. For example, Medicaid covers nursing home care and personal care services, which Medicare does not. If you have both Medicare and Medicaid, Medicare is the primary payer, and Medicaid pays the remainder of the balance after Medicare.
If you have Medicare and another insurance, it is important to understand which is your primary and secondary insurance. The primary payer pays up to the limits of its coverage, and the secondary payer covers the rest of the balance. If the secondary payer does not cover the remaining balance, you may be responsible for the remaining costs.
In certain situations, Medicare may make a conditional payment if your primary insurance company denies payment for your medical bills. This is not the same as when there is an open and active ongoing responsibility for medical care, or an open workers' compensation case. In these cases, Medicare must be repaid from the Workers' Compensation Medicare Set-aside Arrangement.
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Frequently asked questions
The primary payer is the insurance that pays your medical costs first.
The secondary payer is the insurance that pays second. It only pays if there are costs that the primary insurance didn't cover.
Medicare may be the primary or secondary payer depending on the situation and what your other health insurance is. For example, if you are a federal employee, Medicare is the primary payer if you are retired and the secondary payer if you are active.
