Is Medicaid Primary or Secondary to Commercial Insurance?

Healthcare coverage can become complex when individuals are enrolled in more than one health plan. Medicaid is a government program offering free or low-cost health coverage to eligible low-income individuals, families, and those with disabilities. Commercial insurance refers to health plans provided by private companies, often through employers or purchased directly. When a person holds both types of coverage, a common question arises regarding which plan pays for services first. This process, where multiple health plans determine their payment responsibilities, is known as coordination of benefits.

Medicaid’s Position as a Secondary Payer

Medicaid consistently functions as the “payer of last resort” in situations where an individual has other forms of health coverage. This means that Medicaid is almost always secondary to commercial health insurance plans. The federal government mandates this principle through provisions like the Medicaid Act, specifically 42 U.S.C. § 1396a, which requires states to take all reasonable measures to ensure that Medicaid is not the primary payer if other resources are available.

This secondary status implies that the commercial insurance plan will process and pay for covered healthcare services first. After the commercial insurer has paid its portion according to its benefit structure, Medicaid may then cover remaining eligible costs. These remaining costs often include deductibles, copayments, coinsurance, or services that the primary commercial plan does not fully cover but are within Medicaid’s scope of benefits. The rationale behind this federal rule is to conserve Medicaid funds, ensuring they are available for those who have no other means of health coverage.

Processing Claims with Multiple Insurance Plans

When a patient has both commercial insurance and Medicaid, the healthcare provider’s billing department manages the coordination of benefits. The initial step involves submitting the claim for services to the commercial insurance plan. This primary insurer processes the claim according to its terms, determining its payment responsibility.

Once the commercial insurer has paid its adjudicated amount, any remaining balance for eligible services is then submitted to Medicaid. Medicaid will review the claim, taking into account the primary commercial plan’s payment, and may cover the outstanding balance based on its benefit schedule. Patients generally do not need to actively coordinate payments between the two plans; the provider’s office handles this complex administrative task. Presenting both insurance cards at the time of service is important to ensure proper and timely claim submission to both payers.

Understanding Specific Payer Scenarios

While Medicaid is generally secondary to commercial insurance, certain situations involve other entities that might be primary payers. For dual-eligible individuals (those eligible for both Medicare and Medicaid), Medicare serves as the primary payer for Medicare-covered services. In these instances, Medicare processes the claim first, and Medicaid then acts as the secondary payer, potentially covering Medicare’s deductibles, coinsurance, or services not covered by Medicare.

Another scenario involves third-party liability (TPL), where another entity is legally responsible for medical costs. For example, if a patient’s injury is due to a car accident, the auto insurance company may be the primary payer for related medical expenses, even before a commercial health plan. Similarly, for work-related injuries, workers’ compensation insurance takes precedence as the primary payer. In these TPL cases, Medicaid still maintains its “payer of last resort” status, meaning it will only consider payment after all other responsible third parties, including commercial insurance, have met their obligations.

Important Points for Dual Coverage Holders

Individuals holding both Medicaid and commercial insurance should be aware of several aspects. Understanding Explanation of Benefits (EOB) statements received from the commercial insurance plan is beneficial. The EOB details how the commercial insurer processed the claim, including the amount paid, any discounts, and the remaining balance.

This remaining balance is what Medicaid will then consider for payment. Maintaining clear communication with healthcare providers and their billing staff is also important. Informing them about both active insurance coverages at every visit helps ensure claims are submitted correctly, minimizing potential billing issues for the patient.