Can Medicare Be Secondary Insurance? When and How

Medicare, the federal health insurance program for individuals aged 65 or older, certain younger people with disabilities, and individuals with End-Stage Renal Disease (ESRD), often raises questions about its interaction with other health coverage. Many beneficiaries maintain additional forms of health insurance, such as employer-sponsored plans, individual policies, or government programs like Medicaid. This situation necessitates a process called “coordination of benefits,” which determines the order in which different insurance plans pay for healthcare services. This article clarifies the circumstances under which Medicare functions as either the primary or secondary insurer.

Understanding Primary and Secondary Payers

When an individual has more than one health insurance plan, one plan is designated as the primary payer, responsible for paying healthcare costs first, up to its coverage limits. The remaining balance, if any, may then be covered by the secondary payer, which pays after the primary plan has processed the claim. The secondary payer may cover remaining costs like deductibles, copayments, or coinsurance, based on its policy terms.

The rules for determining which plan pays first are established through coordination of benefits regulations, which aim to prevent duplicate payments and ensure accurate claim processing. These rules consider factors like other insurance coverage, employment status, and employer size. This framework establishes a clear hierarchy for financial responsibility, streamlining the payment process.

Common Scenarios Where Medicare is Secondary

Medicare often acts as the secondary payer in specific situations, meaning another insurance plan pays for healthcare services before Medicare. This occurs when other substantial health coverage is primary. Understanding these scenarios helps beneficiaries navigate their insurance benefits effectively.

For individuals still working and covered by an Employer Group Health Plan (EGHP), Medicare generally becomes the secondary payer if the employer has 20 or more employees. The EGHP pays first, and Medicare covers remaining approved costs. If the employer has fewer than 20 employees, Medicare is usually primary, unless the plan is multi-employer or government-sponsored.

When employment ends, individuals may elect COBRA continuation coverage, which allows them to temporarily keep their employer-sponsored health plan. COBRA is usually primary to Medicare for a limited time. Similarly, TRICARE for Life is primary for military retirees, covering services before Medicare.

VA benefits are primary for veterans receiving care through the Department of Veterans Affairs (VA) system. For services not covered by the VA or received outside the VA system, Medicare is usually primary. Workers’ Compensation insurance always pays first for work-related injuries or illnesses.

No-fault and liability insurance (e.g., auto or homeowner’s) are primary for accident-related medical costs. These types of insurance cover accident-related medical expenses before Medicare. In all these scenarios, Medicare covers approved costs only after the primary insurer has paid.

Common Scenarios Where Medicare is Primary

Medicare typically serves as the primary payer in many situations, meaning it is initially responsible for covering healthcare costs. This ensures Medicare benefits are applied first, with other coverage potentially contributing afterward. Understanding these instances is important for how different insurance plans interact with Medicare.

For retired individuals with an Employer Group Health Plan (EGHP) from a former employer, Medicare is generally primary. The EGHP acts as the secondary insurer, paying after Medicare has processed its portion. This differs from situations with current employment, where the employer’s plan might be primary.

When an individual has an Employer Group Health Plan from a small employer (fewer than 20 employees), Medicare is usually primary. This ensures Medicare takes the lead in covering healthcare expenses for beneficiaries with smaller businesses. However, if the plan is part of a multi-employer or government plan, rules may differ.

Medicare is always primary to individual health insurance plans, including those purchased through the Affordable Care Act (ACA) marketplace. Medicare pays first for covered services, and the individual plan acts as the secondary payer, potentially covering remaining costs. This hierarchy prevents individual plans from bearing the initial financial burden.

Medicare Supplement Insurance (Medigap) is always secondary to Medicare. Medigap plans pay for costs Medicare does not cover, such as deductibles, copayments, and coinsurance. Similarly, Medicaid, a state and federal program for individuals with limited income and resources, is always the payer of last resort; Medicare is always primary to Medicaid. If an individual has no other health coverage besides Medicare, it serves as their primary and sole payer.

How Claims are Processed with Two Insurers

When an individual has both Medicare and another insurance plan, coordination of benefits ensures claims are submitted and paid correctly. This involves several steps, beginning with the patient’s proactive communication with providers. Providing complete and accurate insurance information is important for seamless claim processing.

Upon receiving services, providers typically submit the claim directly to the primary insurer. This submission includes necessary medical codes and service details for the primary plan to process the claim according to its policy terms. The primary insurer then pays its portion of approved charges, based on its coverage limits and benefits structure.

After the primary insurer processes the claim and issues payment, an Explanation of Benefits (EOB) is generated. This EOB details what the primary insurer paid, what was applied to the deductible, and any remaining balance. The claim and EOB are then forwarded to the secondary insurer for review.

The secondary insurer assesses the claim and primary insurer’s payment, determining if it will cover remaining costs (deductibles, copayments, or coinsurance) according to its policy terms. While providers often handle submission to the secondary insurer, patients may sometimes need to submit the claim and EOB themselves. Any balance not covered by either plan remains the patient’s responsibility. Medicare maintains a record of other health insurance coverage through its Beneficiary and Family Centered Care-Quality Improvement Organizations (BFCC-QIOs) or the Benefits Coordination & Recovery Center (BCRC) to ensure accurate claim payment.