Does Medicare Secondary Cover Primary Deductible?

Medicare is a federal health insurance program designed primarily for individuals aged 65 or older. It also provides coverage for certain younger people with disabilities or specific medical conditions, such as End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). Many individuals find themselves covered by Medicare alongside another health insurance plan, which can lead to questions about how these different coverages interact. This article aims to clarify the coordination between Medicare and other health coverage, particularly concerning the responsibility for deductibles.

Determining Who Pays First

When an individual has more than one health insurance plan, a process called “coordination of benefits” (COB) determines which plan pays first. The plan that pays first is known as the primary payer, and it pays up to the limits of its coverage. Afterward, the secondary payer steps in to cover additional costs, potentially reducing out-of-pocket expenses.

Medicare typically acts as the primary payer for most beneficiaries. This means Medicare receives the bill first and pays for covered healthcare services, with any remaining costs then potentially passed to the secondary payer. However, specific scenarios dictate whether Medicare is primary or secondary.

Medicare is primary if an individual has Medicare and a small employer group health plan (fewer than 20 employees). It also pays first with COBRA coverage or individual health insurance.

Conversely, Medicare is secondary in several situations. This includes when an individual has Medicare and an employer group health plan from an employer with 20 or more employees. For those with Medicare due to disability, a large employer group health plan (with 100 or more employees) pays first. Medicare is also secondary to retiree health coverage. Additionally, workers’ compensation, no-fault insurance, or liability insurance is primary, with Medicare as the secondary payer for related services.

How Medicare Addresses Primary Plan Deductibles

Medicare, when acting as the secondary payer, does not cover the primary insurance plan’s deductible. This is because Medicare’s role as the secondary payer is to cover services after the primary plan has processed and paid its share. The deductible represents the initial out-of-pocket responsibility of the patient under their primary plan.

When a primary plan has a deductible, the patient must meet that amount before the primary insurance begins to pay for services. Medicare, as the secondary insurer, then considers paying for services up to its own approved amount, minus what the primary plan has already paid. This means Medicare’s payment as a secondary payer is always limited by what Medicare would have paid if it were the primary payer.

For example, consider a healthcare service that costs $1,000. If an individual’s primary plan has a $500 deductible, and Medicare’s approved amount for the service is $800, the process unfolds in stages. First, the primary plan applies the $500 to the deductible, leaving the patient responsible; after the deductible is met, the primary plan may pay a portion of the remaining balance, perhaps 80% of the $500 ($400). Medicare then evaluates the claim; since its approved amount is $800 and the primary plan paid $400, Medicare may pay the difference, up to $400 ($800 – $400). Crucially, the initial $500 deductible from the primary plan is not covered by Medicare.

Submitting Claims with Multiple Insurances

When an individual has both primary and secondary insurance, healthcare providers typically manage the coordination of benefits by submitting claims in the correct order. It is important for patients to provide all their insurance information, including both primary and Medicare details, to their healthcare providers at the time of service. This ensures the provider can initiate the claims process accurately.

The standard procedure involves the healthcare provider first sending the claim to the primary insurance plan. After processing the claim, the primary plan issues an Explanation of Benefits (EOB) to both the patient and the provider. This EOB details what the primary plan paid and what, if anything, remains the patient’s responsibility.

After the primary insurer processes the claim, the provider submits it, along with the primary plan’s EOB, to Medicare. Medicare processes the claim as the secondary payer, considering the primary plan’s payment and its own approved amounts. Once processed, Medicare sends a Medicare Summary Notice (MSN) to the beneficiary, summarizing services, amounts billed, what Medicare approved, and what Medicare paid, along with remaining financial balance. Patients should review both EOBs and MSNs to understand how charges were processed and identify remaining financial responsibilities.