Jeffrey Wade
Medicare and Medicare Supplement Insurance (Medigap) are two different types of health insurance coverages. Medicare is a federal health insurance program, whereas Medicare Supplement Insurance is an additional insurance that can be purchased from a private health insurance company to help pay for out-of-pocket costs that Original Medicare does not cover. Medicare is typically the primary payer, but in certain situations, such as when an individual has group health coverage or retiree coverage, Medicare may be the secondary payer. The coordination of benefits determines the order of payment, with the primary payer paying up to the limits of its coverage, and the secondary payer covering the remaining balance. Medicare Supplement Insurance plans are considered secondary payers to Medicare, and they receive claims after Medicare has paid its portion.
| Characteristics | Values |
|---|---|
| Medicare as primary payer | Pays up to the limits of its coverage |
| Medicare as secondary payer | Pays only if there are costs the primary insurance didn't cover |
| Medicare Supplement Insurance (Medigap) | Extra insurance to help pay out-of-pocket costs in Original Medicare |
| Requirements for Medigap | Must have Original Medicare (Part A and Part B) |
| Medigap policies | Standardized and named by letters (e.g., Plan G or Plan K) |
| Medicare Advantage | Medicare is no longer the primary source of coverage |
| Medicare with other insurance | Each type of coverage is called a "payer" |
| Order of payment | "Coordination of benefits" |
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What You'll Learn
Medicare and other insurance payers
Medicare is a federal health insurance program for individuals aged 65 and older, as well as certain individuals under 65 with disabilities. It is available in various parts, including Part A, which covers inpatient care in hospitals, and Part B, which covers medical insurance. Medicare can work alongside other insurance payers, such as employer coverage, union coverage, retiree coverage, or Medicaid. When an individual has Medicare and other health insurance, each type of coverage is assigned a payer status, either "primary" or "secondary".
The primary payer pays up to the limits of its coverage and then sends the remaining balance to the secondary payer. If the secondary payer does not cover the remaining balance, the individual may be responsible for the outstanding costs. The order of payment is called "coordination of benefits". In cases where the insurance company does not pay the claim promptly, typically within 120 days, the healthcare provider may bill Medicare, which may make a conditional payment to cover the bill and then recover the amount from the primary payer later.
The coordination of benefits also applies to situations where Medicare is the secondary payer. For instance, if an individual has TRICARE, a health coverage program for uniformed service members, their Medicare drug plan would pay first, and TRICARE would pay second. Similarly, if an individual has group health coverage through an employer with 20 or more employees, the non-tribal group health plan pays first, and Medicare pays second.
It is important to note that Medicare does not automatically know if an individual has other coverage. However, insurers must report to Medicare when they are the primary payer on medical claims. Individuals should inform their healthcare providers about any changes in their insurance or coverage to ensure proper billing and avoid delays.
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Medicare as primary payer
When an individual has Medicare and another type of insurance, Medicare is either the primary or secondary insurer. 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 does not cover the remaining balance, the individual may be responsible for the remaining costs.
Medicare is typically the primary payer when combined with employer-group insurance. However, this depends on certain factors, such as the size of the employer and the reason for Medicare coverage. If the employer has less than 20 employees, Medicare is generally the primary payer, whereas if the employer has 20 or more employees, the group insurance plan is usually the primary payer. Additionally, if an individual is under 65 and eligible for Medicare due to a disability, and their employer has more than 100 employees, Medicare acts as the secondary payer.
There are exceptions to the rule, however. For instance, if an individual under 65 has End-Stage Renal Disease (ESRD), Medicare is usually the primary payer, regardless of whether they have group health coverage through a larger employer. In most cases, Medicare is the primary payer for individuals with ESRD, and they can enrol in Medicare regardless of their age or work status.
In the case of non-tribal group health plan coverage through an employer with 20 or more employees, the non-tribal group health plan pays first, and Medicare pays second. If an individual has TRICARE, their Medicare drug plan pays first, and TRICARE pays second.
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Medicare as secondary payer
When Medicare was introduced in 1966, it was the primary payer for all claims except those covered by Workers' Compensation, Federal Black Lung benefits, and Veteran’s Administration (VA) benefits. However, since 1980, Medicare has become the secondary payer in certain instances, meaning that another entity has the primary responsibility for paying before Medicare. This shift aimed to ensure that Medicare does not pay for items and services that certain health insurance or coverage is primarily responsible for, thus protecting the Medicare Trust Funds.
Medicare Secondary Payer (MSP) situations arise when an individual has Medicare and other health insurance or coverage, such as group health coverage through employment or non-group health coverage resulting from an injury or illness. In these cases, the primary payer pays up to the limits of its coverage, and the remaining balance is sent to the secondary payer. If the secondary payer does not cover the remaining balance, the individual may be responsible for the remaining costs.
There are specific scenarios where Medicare remains the primary payer. For example, for beneficiaries who are not covered by other types of health insurance or coverage, Medicare takes primary responsibility. Additionally, for individuals aged 65 or older with Medicare and coverage through their current employer (known as the Group Health Plan), Medicare may be the primary payer, provided certain conditions are met.
It is important to note that Medicare may make a conditional payment if the primary payer does not pay the claim promptly. This means that Medicare pays the bill to ensure the beneficiary does not have to use their own money, but the payment must be repaid to Medicare when a settlement or other payment is made. This can occur when there is a delay in payment from the primary payer or when Medicare pays a claim without knowing it is related to another payer's responsibility, such as workers' compensation.
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Medicare Supplement Insurance (Medigap)
Medicare Supplement Insurance, also known as Medigap, is additional insurance that you can purchase from a private health insurance company. This insurance helps cover any out-of-pocket costs that arise with Original Medicare (Part A and Part B). Essentially, Medigap serves to fill in the gaps of Original Medicare by covering extra costs such as copayments, coinsurance, and deductibles.
It is important to note that Medigap is not the same as Medicare Advantage (Part C), which is an alternative to Original Medicare. Medigap is supplemental insurance that works alongside Original Medicare, while Medicare Advantage is a separate type of insurance plan that offers different benefits and provider networks.
To be eligible for Medigap, you typically must already have Original Medicare. This means you need to be enrolled in both Part A, which covers hospital insurance, and Part B, which covers medical insurance. Medigap policies are sold by private companies, and each company will offer a range of different plans, each identified by a letter. These plans are standardized by the government, ensuring that Plan G, for example, offers the same benefits regardless of the insurance company selling it.
The cost of Medigap policies can vary depending on various factors, including the insurance company, your location, and the specific plan chosen. Some plans may have higher premiums but cover more services, while others may have lower premiums and offer less coverage. It is important to carefully review the different plans available and choose the one that best suits your individual needs and budget.
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Medicare Advantage plans
When it comes to Medicare and other 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 the remaining balance, if there is one. Medicare Advantage Plans (also known as Part C) are offered by Medicare-approved private companies and can provide expanded coverage beyond Original Medicare, often with extra benefits.
There are several types of Medicare Advantage Plans, including Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Special Needs Plans (SNPs), Medicare Medical Savings Accounts (MSAs), and Private Fee-for-Service Plans (PFFS). A Medicare Advantage Plan can disenroll you for various reasons, such as moving outside the plan's service area, losing Medicare or Medicaid eligibility, or joining a drug plan. In such cases, there is a grace period during which you are eligible for a Special Enrollment Period, allowing you to review your options and ensure continued coverage.
It's important to understand the coordination of benefits when dealing with multiple payers. Your healthcare providers should be informed if you have coverage in addition to Medicare, so they can send your bills to the correct payer and avoid delays. If the primary payer does not pay the claim promptly, Medicare may make a conditional payment and then recover any payments that the primary payer should have made. This process ensures that individuals with multiple insurance coverages can effectively utilize their benefits while minimizing potential confusion or overlap in payments.
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Frequently asked questions
Medicare Supplement Insurance, also known as Medigap, is extra insurance that can be purchased from a private health insurance company to help pay for out-of-pocket costs in Original Medicare.
Yes, generally, you need to have Original Medicare, which includes Part A (Hospital Insurance) and Part B (Medical Insurance), to be eligible to purchase a Medigap policy.
Medicare Supplement Insurance helps cover costs such as your share of costs in Original Medicare. Some Medigap policies also offer coverage for travel outside the U.S. but may not cover long-term care, vision, dental, hearing aids, private-duty nursing, or prescription drugs.
Medicare is the primary payer when it is your only coverage option, such as when receiving care at a civilian facility. In other cases, Medicare can be the primary payer if it pays first for specific services or if it is deemed the primary coverage for your particular situation.
If Medicare is the primary payer and doesn't cover all the costs, the remaining balance may be sent to the "secondary payer", which could be your Medicare Supplement Insurance or another form of insurance. If the secondary payer doesn't cover the remaining balance, you may be responsible for the remaining costs.
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