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

Navigating healthcare coverage can be complex, especially with both private health insurance and Medicare. Understanding which plan pays first, known as the primary payer, is crucial for managing medical expenses and avoiding unexpected costs. This article clarifies how these two insurance types coordinate benefits for proper claim processing.

Understanding Coordination of Benefits

When an individual holds more than one health insurance policy, such as private insurance and Medicare, rules determine which plan pays first. This process is called “coordination of benefits” (COB). COB prevents duplicate payments and ensures efficient claim processing across multiple insurers.

The plan that pays first is the “primary payer.” This insurer covers eligible healthcare costs up to its coverage limits. Once the primary payer processes the claim and pays its portion, the remaining balance is sent to the “secondary payer.” The secondary payer may cover remaining eligible expenses, such as deductibles, copayments, or coinsurance, depending on its policy terms.

Determining the Primary Payer

Determining whether Medicare or private insurance is primary depends on factors like the type of private insurance, employment status, and employer size. Federal regulations dictate these coordination rules to protect Medicare trust funds.

For individuals aged 65 or older who are still actively working and have group health plan coverage through their employer or their spouse’s employer, employer size is key. If the employer has 20 or more employees, the employer group health plan (EGHP) is typically the primary payer, and Medicare is secondary. This rule applies if the employer has had 20 or more employees for at least 20 calendar weeks. However, if the employer has fewer than 20 employees, Medicare usually becomes the primary payer, and the employer plan pays second.

For individuals under 65 who qualify for Medicare due to a disability, different employer size thresholds apply. If the disabled individual, or a family member through whom they receive coverage, is actively employed by an employer with 100 or more employees, the large group health plan is generally primary. Conversely, if the employer has fewer than 100 employees, Medicare serves as the primary payer. These employer size rules ensure Medicare does not pay for services another health plan should cover.

Other situations also influence primary payer status. No-fault insurance (e.g., from an auto accident) and workers’ compensation are generally primary payers for services related to the injury or illness they cover, with Medicare acting as secondary. These insurance types cover costs related to particular incidents.

Navigating Specific Coverage Situations

For retirees who maintain health coverage through a former employer, Medicare is generally the primary payer for their medical expenses. The retiree health plan acts as secondary, potentially covering remaining costs. Similarly, if an individual has COBRA continuation coverage, Medicare is usually primary if they are aged 65 or older or have Medicare due to disability.

Medicare Supplement Insurance plans, also known as Medigap, operate differently from employer-sponsored private insurance. Medigap policies pay after Medicare, covering out-of-pocket costs like deductibles and coinsurance. Medigap plans are always secondary to Medicare and do not act as primary insurance.

TRICARE for Life, a healthcare program for uniformed service retirees and their families, coordinates with Medicare. For those not on active duty, Medicare is generally the primary payer for Medicare-covered services, and TRICARE for Life pays second. However, if services are received at a military hospital or other federal healthcare provider, TRICARE typically pays, and Medicare does not. Veterans Affairs (VA) benefits cover services received at VA facilities, and Medicare covers non-VA services, meaning they do not directly coordinate as primary and secondary for the same service.

The Claims Process with Dual Coverage

When an individual has both private insurance and Medicare, the claims process involves a specific order to ensure correct payment. Healthcare providers play a central role by identifying all available coverages. Beneficiaries should inform their healthcare providers about all their health and drug coverages. This ensures bills are sent to the correct payer in the proper sequence.

The healthcare provider files the claim with the primary insurer first. Once the primary insurer processes the claim, it sends an Explanation of Benefits (EOB) to the beneficiary, detailing what was covered and what remains. The primary insurer then forwards the claim information, along with its payment and EOB, to the secondary insurer.

The secondary insurer reviews the claim and the primary insurer’s payment. It then determines its payment based on its specific coverage terms, often covering deductibles, copayments, or coinsurance not covered by the primary insurer. After the secondary insurer processes the claim, any remaining balance may be billed to the beneficiary. If a claim is not processed correctly, the beneficiary may need to follow up with an insurer or provide additional information.