Face it, health insurance can be complicated. But it doesn't have to be. One of the most common health insurance concerns relates to Medicare. More precisely, whether someone can use Medicare with other health insurance coverage. This is perfectly legal. However, there are rules about which of these insurances pays out first.
Yes! Many people do. As you know, Medicare covers the cost of most essential medical services for people not covered by other types of insurance (for example, an employer's group health plan).
But what happens if you are entitled to both Medicare and your employer's insurance?
This only really happens in two limited circumstances, mainly:
If you are over 65 years old, you are eligible for Medicare. This doesn't change if you are still working and have a group health plan from your employer. In this circumstance, you are entitled to both Medicare and your employer's insurance.
If you work for a small company, you are eligible for Medicare. (Your company has fewer than 20 employees.) In this circumstance, you are entitled to both Medicare and your employer's insurance.
In both instances, you will need to sign up for Medicare before you receive benefits. (The Social Security Administration will only enroll you in Medicare if you are receiving Social Security close to/after your 65th birthday). If you work for a company with fewer than 20 employees, you can enroll in Medicare immediately after starting your job or delay enrollment until a future date. However, you will need to tell them eventually. Medicare won't know that your company has fewer than 20 employees.
If you have Medicare and other health insurance, each one of these insurances is called a "payer." Because there is more than one payer in your situation, there are rules about something called the "coordination of benefits." In other words, there are rules that decide which insurance pays first.
Here's a simple way to look at it:
The "primary payer" is the insurance that pays your medical bills first. (Up to the limits of the coverage.)
The "secondary payer" is the insurance that pays the rest of your bills if the primary payer doesn't cover the whole amount.
(You might have a third or a fourth payer too. The third payer is the insurance that pays the rest of your bills if the second payer doesn't cover the rest of the amount, and so on...)
In almost all circumstances, the primary payer is the most important because it has the main responsibility of paying your medical bills. The second (or third or fourth) payer picks up the rest of your bill if it exceeds the limit of the primary payer.
Here's an example:
You go into the hospital for surgery and leave with a large medical bill.
Your primary payer is responsible for paying the bill.
If your claim exceeds the limit of the primary, the second payer pays
the rest of the claim.
If your claim exceeds the limit of the second payer, the third payer pays the rest. (And so on...)
This is the most important question. The notion of "primary" or "secondary" payer, and so on is relatively simple. However, many people assume that Medicare is the primary payer, but this isn't always the case.
Medicare is, almost always, the primary payer for people not covered by other insurance coverage
Your employer's insurance will usually be the primary payer if you have health insurance at work
There are some other (rare) circumstances when Medicare might become the primary payer (albeit temporarily). If the primary payer (for example, your employer's insurance) doesn't pay your medical bill quickly, the healthcare provider might bill Medicare instead. This might happen if the primary payer doesn't settle your claim within 120 days or so. Medicare will pay the bill and then recover the money owed from the primary payer at a later date.
If Medicare is not the primary payer, it is often called the Medicare Secondary Payer (MSP). Many healthcare providers use this term. It means another insurance company has the primary responsibility of paying your medical bills before Medicare.
Still not sure? If you are not sure whether Medicare is your primary payer, contact the Benefits Coordination & Recovery Center (BCRC), part of the Centers for Medicare and Medicaid Services, at 1-855-798-2627. They should provide you with additional information about your circumstances.
Health insurance in the U.S. is ever-changing. When the government established Medicare in 1966, it was the primary payer for almost all medical bills except those covered by Workers' Compensation, Veteran's Administration (VA) benefits, and Federal Black Lung benefits.
This changed in the '80s when the government made Medicare the secondary payer in most instances to shift costs to other sources and ensure "that Medicare does not pay for items and services that certain health insurance or coverage is primarily responsible for paying," says the Centers for Medicare and Medicaid Services.
Despite the above, there are several circumstances when it's more difficult to determine whether Medicare is the primary, secondary, or subsequent payer.
Here are some examples of when Medicare unexpectedly becomes the primary payer:
Person A is 66 years old and has a group health plan from her employer. The employer has fewer than 20 employees. In this scenario, Medicare becomes Person A's primary payer. The employer's group health plan becomes the secondary payer.
Person A works for a company with fewer than 20 employees.
Person A is aged 65 or older. (She is a Medicare beneficiary.)
Person B is 70 years old and recently retired from work so she is entitled to COBRA insurance. In this scenario, Medicare becomes Person B's primary payer. COBRA becomes the secondary payer.
Person B is aged 65 or older. (She is a Medicare beneficiary.) Medicare comes before COBRA.
Person C is eligible for Tricare-for-Life, a type of insurance for military retirees (and their spouses). In this scenario, Medicare becomes Person C's primary payer. Tricare-for-Life becomes the secondary payer.
Person C is eligible for Tricare-for-Life, but Medicare comes "first."
Person D qualifies for Medicaid, which provides healthcare assistance for people with low incomes. In this scenario, Medicare becomes Person D's primary payer. Medicaid becomes the secondary payer.
Person D is eligible for Medicaid, but Medicare comes "first."
In circumstances where Medicare is the primary payer but doesn't cover all the costs of a claim, it forwards details of the claim to the second insurance company. This is called the "continuation of benefits." Sometimes, there are problems with transferring this data, but the process is efficient for most people.
If Medicare is your primary provider, here are the basics:
Medicare doesn't cover all healthcare costs.
There are many different facets of Medicare, including different "parts."
You can usually receive healthcare services from any healthcare provider in the United States (doctor, hospital, etc.).
Original Medicare includes hospital insurance (Medicare Part A) and medical insurance (Medicare Part B). Prescription drugs are not covered by Original Medicare. However, you can join a separate plan called Medicare Part D.
This all depends on the plan. Some group plan insurance companies let employees receive healthcare services from any healthcare provider in the U.S. (like Medicare). Others don't. Some group plan insurance companies provide employees with access to prescription drugs. Others don't.
When you start a new job (or your employer changes group plans), you will receive information about what your policy covers. Read all documents carefully.
Here are some final tips:
If you work for a company that has fewer than 20 employees, don't wait for your employer to talk to you about Medicare. If you are eligible, you will need to enroll in Medicare yourself.
If you are approaching your 65th birthday, you are entitled to Medicare on top of your existing group health insurance plan. You will need to sign up for Medicare yourself. Your employer cannot do it for you.
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