Does Secondary Insurance Cover Medicare Deductible?

Medicare’s Deductibles Explained

Medicare, the federal health insurance program for individuals aged 65 or older and some younger people with disabilities, involves several components, each with its own cost-sharing requirements. Understanding these costs, particularly deductibles, is an important step in navigating healthcare expenses. The program divides its coverage into different parts, with Part A and Part B being the most common for medical services.

Medicare Part A primarily covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health services. The Part A deductible applies per benefit period, not annually. A benefit period begins the day a person is admitted as an inpatient in a hospital or skilled nursing facility and ends when they have not received inpatient hospital care or skilled nursing facility care for 60 consecutive days. This means an individual could potentially pay the Part A deductible multiple times within a calendar year if they have separate benefit periods.

Medicare Part B covers medically necessary services, such as doctor visits, outpatient care, durable medical equipment, and many preventive services. Unlike Part A, the Part B deductible is an annual deductible. Once this annual deductible is met, Medicare typically pays 80% of the Medicare-approved amount for most covered services, and the individual is responsible for the remaining 20% coinsurance.

Understanding Secondary Coverage

Secondary insurance serves as an additional layer of coverage that works in conjunction with primary insurance, such as Medicare, to help manage healthcare costs. For individuals enrolled in Medicare, secondary coverage can help reduce out-of-pocket expenses that Medicare does not fully cover, including deductibles, copayments, and coinsurance.

Several types of plans commonly function as secondary insurance to Medicare. Medigap, also known as Medicare Supplement Insurance, is offered by private companies and helps pay some of the healthcare costs that Original Medicare does not cover. Employer-sponsored retiree health plans are often provided by former employers to their retired employees, frequently coordinating benefits with Medicare.

Other types of secondary coverage include:
Medicaid: A joint federal and state program providing health coverage to low-income individuals and families; can act as secondary coverage to Medicare for those who qualify.
TRICARE: The healthcare program for uniformed service members, retirees, and their families; coordinates benefits with Medicare for eligible beneficiaries.
VA benefits: Can supplement Medicare coverage for veterans, especially for service-connected conditions and other approved care.
COBRA coverage: Allows temporary continuation of employer health coverage; can serve as secondary insurance to Medicare for a limited period.

How Different Secondary Plans Address Deductibles

Secondary insurance plans address Medicare deductibles in various ways, depending on the specific type of plan and its structure. Medigap policies are designed to help cover costs not paid by Original Medicare, including deductibles. For example, Medigap Plan F and Plan C cover both the Medicare Part A and Part B deductibles in full. Medigap Plan G covers the Medicare Part A deductible in full and all Medicare Part B coinsurance, but it does not cover the Medicare Part B deductible. Other Medigap plans, like Plan N, may cover a portion of deductibles or have different cost-sharing arrangements.

Employer-sponsored retiree health plans vary widely in how they cover Medicare deductibles. Many of these plans are structured to pay for the deductibles and coinsurance amounts that Medicare leaves as patient responsibility. Specific benefits, including deductible coverage, are determined by the employer and the plan administrator. Individuals should consult their plan documents to understand the extent of their coverage.

Medicaid functions as a payer of last resort for eligible low-income individuals who also have Medicare. For those who are “dual-eligible,” meaning they qualify for both Medicare and Medicaid, Medicaid typically covers Medicare’s deductibles, copayments, and coinsurance. This coordination significantly reduces or eliminates out-of-pocket costs for healthcare services for these beneficiaries.

TRICARE for Life (TFL) serves as secondary coverage to Medicare Part A and Part B for eligible military retirees and their families. TRICARE generally covers Medicare Part A and Part B deductibles and coinsurance. VA benefits can also coordinate with Medicare, potentially covering deductibles and other costs for approved care, especially for service-connected conditions.

COBRA coverage, when active alongside Medicare, typically maintains the same benefit structure as the original employer-sponsored plan. If the employer plan previously covered deductibles, COBRA would continue to do so as secondary coverage to Medicare.

The Billing Process with Dual Coverage

When an individual has both Medicare and secondary insurance, the billing process follows a specific order. In almost all situations, Medicare acts as the primary payer, meaning it processes the healthcare claim first.

Healthcare providers typically submit the claim directly to Medicare for initial processing. Medicare then reviews the claim and pays its portion of the approved charges. Following Medicare’s processing, an Explanation of Benefits (EOB) is generated, detailing what Medicare paid and what amount remains as patient responsibility, including any deductibles or coinsurance.

After Medicare has processed the claim, the remaining balance is then typically forwarded to the secondary insurance provider. The secondary insurer reviews the claim. It determines whether to cover the outstanding deductible, coinsurance, or other costs that Medicare did not pay. The patient usually receives a bill only after both Medicare and the secondary insurance have completed their processing and payments, indicating any remaining amount they are responsible for.