Can I Combine Medicare With Other Types Of Insurance?
You don’t even have to give up your existing insurance coverage, but it’s important to know how Medicare will interact with that coverage.
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Medicare is unique in the US insurance market. First of all, it's available to everyone who is at least 65 years old or medically eligible, meaning that the person has End-Stage Renal Disease (ESRD) or a disability. You don't even have to give up your existing insurance coverage, but it's essential to know how Medicare will interact with that coverage.
Primary and Secondary Payers: What That Means and How It Works
The healthcare industry refers to insurers as payers. Whenever you have more than one insurance policy, each becomes a primary, secondary, or even tertiary payer.
The primary payer pays up to its coverage limits.
The secondary payer covers what the primary payer doesn't, according to its coverage limits
The tertiary payer is next in line, ready to pay whatever it can that the primary and secondary payers do not.
Medicare may land anywhere along this continuum of coverage, depending on the nature of the other coverage, though it most often pays first or second.
Medicare and Medicaid
Medicaid never serves as a primary payer when Medicare is in the mix. Medicaid only starts paying when all other coverages, including Medicare, Medicare Supplement Plans, and group health plans, have paid what they can.
Medicare and Group Health Plans
Under federal law, a company with 20 or more employees has to offer you the same coverage as it would suggest anyone else, even if you're over 65. You may choose to also enroll in Medicare, in which case Medicare becomes the secondary payer and your employer-sponsored health plan is the primary payer. This is the most common arrangement if someone has a group health plan and Medicare.
However, if either of the following situations applies, Medicare is the primary payer.
Your company has 19 or fewer employees
Your company has 100 or fewer employees, and you have Medicare because of a disability
If you work for a smaller employer with fewer than 20 employees, Medicare is usually the primary payer.
Medicare and Multi-Employer Plans
When a company has fewer than 100 employees, they sometimes pool resources with other smaller employers to form a group plan.
If at least one of the employers in the pool has 20 or more employees, the group plan will be the primary payer.
If all of the employers in the pool have fewer than 20 employees, Medicare is the primary payer.
If one or more employers are more significant, the group plan pays first.
Medicare and Retiree and COBRA Health Coverage
Some companies offer group health plan coverage to employees who retire. If this is the case, unless you have a working spouse whose plan covers you, Medicare is your primary payer, and your retiree coverage is secondary.
Federal retiree coverage
If you have retiree coverage through the Federal Employees Health Benefits Program (FEHB), you don't have to enroll in Medicare, but you may wish to sign up in case you ever want to drop your federal coverage.
You may also want to get Medicare if you need home health assistance or certain types of durable medical equipment (DME) that your federal insurance wouldn't cover.
As an FEHB recipient, you may change the type of coverage that you get once you enroll in Medicare. People who choose a Medicare Advantage plan, for example, often want to drop or downgrade their FEHB coverage because the Advantage plan renders it no longer necessary.
Be careful, however. If you drop your Medicare Advantage plan voluntarily, you'll need to wait until the next open enrollment period before you can re-enroll in FEHB.
COBRA
Medicare also pays first if you have continuation coverage through the COBRA program, provided you're over 65 or have Medicare due to a non-ESRD disability. If you have ESRD and Medicare overlapping with COBRA, then Medicare pays second.
Medicare and Veterans' Benefits
Medicare and veterans' benefits can't pay for the same services, with certain exceptions. Primarily, if you're in a non-VA hospital and the VA authorizes coverage but doesn't settle for anything, Medicare can step in as secondary payer or cover what the VA insurance doesn't cover.
Other Contingencies
There are always special cases in the world of health insurance. Some include:
Coverage via liability or no-fault insurance
Workers' compensation payments
TRICARE for active military
More than one type of coverage in addition to Medicare
If you don't see your situation explained in detail here, check with Medicare or contact a representative from your additional insurer to find out who your primary payer is.
If you have other coverage of any kind and don't have Medicare yet, find out whether there are any persuasive arguments for joining Medicare or not.
Should you combine insurance types, or delay signing up for Medicare?
Whether you sign up for Medicare or not is your decision. Be aware that your care needs or current coverage eligibility may change in the future, so you'll want to know whether you'd pay the penalty if you join Medicare then.
Private Policy Holders
If you or your spouse are working and have group coverage from a company with 20 or more employees, you can choose to delay signing up for Medicare. You can sign up for Medicare after this employment situation ends. As long as you sign up within eight months of your or your spouse's termination date, you won't incur penalties.
Always check whether your employer can require you to sign up for Medicare. Most larger employers aren't allowed to request this, but the smallest employers may have that option.
Veterans' Benefit Recipients
The Department of Veterans' Affairs recommends that all recipients of benefits sign up for Medicare coverage as soon as they become eligible, for several reasons:
You'll have more options to receive care from non-VA providers
Medicare charges a penalty to VA benefits recipients who choose to sign up for Medicare after their initial enrollment period. This penalty lasts as long as you have Medicare and grows every year you delay signing up.
Medicare Part D lets you get prescription drugs from private pharmacies instead of the VA mail-order service. You can sign up for Part D later and not pay penalties.
The Take-Away
You can combine Medicare with other types of coverage. Often, it means that your overall coverage is more comprehensive.
Your coverage details depend on your private insurance and what type of Medicare coverage you choose. Always do your homework and explore your options and learn about how payouts will work with your combination of coverage. If you're ever unsure, talk to a professional.