If I Have Private Insurance and Medicare, Which Is Primary?

Navigating healthcare coverage can be complex, especially when an individual is covered by both private health insurance and Medicare. Understanding which insurance pays first, known as the primary payer, is important for managing healthcare costs and ensuring claims are processed correctly. This article explores the coordination of benefits between private insurance and Medicare, clarifying when each program pays first. It also outlines how claims are handled when multiple insurers are involved.

Understanding Primary and Secondary Payers

When an individual has more than one health insurance policy, “coordination of benefits” determines the order in which each plan pays for medical services. The primary payer is the insurance plan responsible for paying the claim first. After the primary payer has paid its share, remaining eligible costs are submitted to the secondary payer.

The secondary payer reviews the claim and may cover some or all of the costs not covered by the primary plan, depending on its terms. This coordination prevents duplicate payments and helps ensure individuals receive the full benefits of their combined coverage.

When Private Insurance Pays First

In several situations, private health insurance serves as the primary payer over Medicare. This arrangement is governed by specific rules designed to coordinate benefits. Understanding these scenarios helps individuals anticipate which plan pays first.

An employer group health plan (EGHP) is often primary for active employees. If an individual is 65 or older and covered by an EGHP through their or their spouse’s current employment, and the employer has 20 or more employees, the EGHP pays first. For individuals under 65 with a disability, the EGHP is primary if the employer has 100 or more employees.

When an individual has Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage, COBRA can be primary. This is true during the 30-month coordination period for individuals with End-Stage Renal Disease (ESRD) who are also eligible for Medicare. In such cases, the COBRA plan pays first, and Medicare becomes secondary.

Workers’ Compensation insurance is always primary for medical expenses related to work-related injuries or illnesses. Medicare will not pay for services that Workers’ Compensation is responsible for. No-Fault insurance, such as medical payments coverage from an auto insurance policy, also pays first for accident-related medical expenses.

For individuals with End-Stage Renal Disease (ESRD), their private group health plan is primary for a 30-month coordination period. This period begins when the individual becomes eligible for Medicare due to ESRD, even if they haven’t yet enrolled. After this 30-month period, Medicare becomes the primary payer.

When Medicare Pays First

Medicare becomes the primary payer in numerous situations, meaning it pays for healthcare services before any other insurance plan. This is common when other private coverage types are not employment-based or are designed to supplement Medicare.

For active employees aged 65 or older covered by an employer group health plan (EGHP) from an employer with fewer than 20 employees, Medicare is the primary payer. If an individual is under 65 with a disability and their employer has fewer than 100 employees, Medicare pays first.

Medicare is primary for individuals covered by retiree health plans. These plans pay after Medicare has covered its share of the costs. Medicare also pays first if an individual has COBRA coverage and Medicare, unless it is during the 30-month ESRD coordination period.

When an individual has an individual health insurance policy purchased directly, not through an employer, Medicare is the primary payer. Medicare Supplement (Medigap) policies are always secondary to Medicare. Medigap plans help cover out-of-pocket costs like deductibles and coinsurance after Medicare has paid its portion.

TRICARE, a healthcare program for uniformed service members, retirees, and their families, pays after Medicare. This means Medicare is primary for those with TRICARE For Life benefits in the U.S. and its territories. Department of Veterans Affairs (VA) benefits are often secondary to Medicare, requiring individuals to choose which benefit to use for each medical service.

How Claims are Handled

Once it is determined whether private insurance or Medicare is the primary payer, the process for handling claims follows a specific sequence. This approach ensures beneficiaries receive appropriate coverage.

Healthcare providers submit the claim to the primary insurance plan. The primary insurer then processes the claim according to its policy terms, applying deductibles, copayments, and coinsurance amounts. After processing, the primary insurer issues an Explanation of Benefits (EOB) to both the patient and the provider, detailing what was covered and what remains unpaid.

The remaining balance, along with the primary insurer’s EOB, is sent to the secondary insurance plan. The secondary insurer reviews the claim and the primary EOB to determine what additional costs it will cover based on its own policy provisions. This process helps reduce the patient’s out-of-pocket expenses.

If a claim is not processed correctly, or if there are questions about payment, individuals should first contact their healthcare provider’s billing department. If the issue remains unresolved, reaching out to the primary and then the secondary insurer directly can help clarify the situation and facilitate proper payment.