You probably know how important it is to have good healthcare coverage, but how do you make sure that you have the right coverage for you? As a senior citizen on Medicare, you might be asking yourself, how does Medicare work with other insurance? What are my options for maximizing coverage benefits? Read this guide to find out how Medicare coordinates benefits with other insurance plans to make sure that you are getting the most out of your healthcare plans.
How Medicare Coordinates With Other Coverage
Let’s start by reviewing how Medicare coordinates with other coverage. If you have Medicare and some other type of health coverage, both act as a “payer”. One will be the primary payer, and the other will be the secondary payer. Which coverage acts as the primary payer and which serves as the secondary payer depends on what type of alternative coverage you have. This is called “coordination of benefits”. How Medicare coordinates your benefits will vary depending on what other type of other health insurance plan you have.
Primary Payer vs. Secondary Payer
Let’s talk about what it means to be a primary payer and a secondary payer. Primary insurance pays up to its coverage limit. The primary payer always pays first. Then, the secondary payer only pays if there are some costs that the primary payer didn’t cover. You should know that your secondary insurance may not pay all expenses that were not covered by the primary payer.
What all this means is that while the primary and secondary payer can potentially cover all expenses related to a medical bill, it is still possible that there will be some costs leftover that neither payer is obligated to cover and you will be responsible for paying.
Does Medicare automatically know that you have other coverage?
It is important to understand that Medicare will not automatically know if you have other coverage. However, if Medicare is your secondary payer, your other health plan will be required to report to Medicare when they are responsible for paying first. At any rate, it’s a good idea to inform Medicare if you are still on some other health insurance plan when you turn 65.
What is a conditional payment?
Perhaps you have heard about conditional payments. If not, or if you need a refresher, a conditional payment is a payment Medicare makes for a service that another insurance company may be responsible for. While Medicare covers this cost for you, you must repay it later on if and when you get a settlement, judgment, award, or later payment. Conditional payments often apply to situations in which the other payer is some sort of no-fault or liability insurance or in situations in which workers’ compensation applies.
What happens if you have other health insurance besides Medicare?
There are various reasons for someone to have Medicare and some other health insurance. Perhaps you are on Medicaid, or are over the age of 65 and are still on an employer’s health plan. Whatever the reason, we have the information that helps you to understand whether Medicare is your primary or second insurance in any given situation.
One of the most common situations in which people have coverage from both Medicare and another health plan is people who are covered under Medicaid. This applies to many people who are low-income earners and/or suffer from a disability. If you are covered by both Medicare and Medicaid, Medicare is always the primary payer for services covered by Medicare. Medicaid only pays after Medicare has already paid, and it is actually quite uncommon for this to happen.
65 and Older and Receiving Coverage From Current Employer (or Spouse's Employer)
Another situation that applies to people who are 65 or older is to still have health coverage from an employer on top of your Medicare coverage. If you are still working when you become eligible for Medicare, or your spouse’s employer provides you coverage, you will need to pay close attention to the size of your employer’s group health insurance plan.
If you are eligible for Medicare and covered under an employer who has 20 or more employees, your employer group health plan pays first. However, if your employer has less than 20 employees, Medicare pays first. The only exception to this, in which case your employer group health plan pays first, is if your employer joins a multi-employer plan in which one or more of the other employers has 20 or more employees.
If you are 65 or older and covered by a spouse’s employer group health plan, the group health plan pays first if the employer has 20 or more employees. If your spouse’s employer has fewer than 20 employees, Medicare will pay before your spousal coverage does.
If you choose not to accept employer coverage, Medicare will pay its share of any Medicare-covered service. The same is true if you previously had coverage from your employer (or your spouse’s employer), and you choose to drop it.
65 and Older and Receiving Retiree Health Benefits
Many people are eligible for retiree health benefits once they reach age 65. In this case, Original Medicare (Part A and Part B) is always primary to coverage from a former employer or union. Your retiree health benefits act as a secondary payer to your healthcare expenses, perhaps covering some of the costs that Medicare didn’t pick up or helping with out-of-pocket expenses.
In some cases, retiree health plans may even provide drug coverage. If this coverage is deemed “creditable” by Medicare, you may be able to hold off on enrolling in Medicare Part D without having to face late enrollment penalty fees in the future.
65 and Older and Receiving Federal Retiree Benefits
If you receive federal employee health benefits, such as the Federal Employees Health Benefits Program (FEHBP) or Civil Service Retirement System (CSRS), and choose to enroll in Medicare as well, Medicare will act as your primary payer. Medicare may even cover some services that these plans don’t, like home health care and certain medical equipment.
Federal retiree health plans may have drug coverage included in them as well, and if this drug coverage is considered to be “creditable” by Medicare, then you don’t have to join a Part D drug plan and won’t face late enrollment penalty fees in the future.
You should be aware that if you are covered by federal retiree benefits and choose not to enroll in Medicare Part B when you are first eligible, you may face late enrollment penalty fees should you choose to enroll down the line.
ESRD Beneficiary and Receiving Coverage From a Group Health Plan or COBRA
If you are eligible for Medicare because you suffer from End-Stage Renal Disease (ESRD), meaning that you receive dialysis or have undergone a kidney transplant, your employer group health plan or COBRA pays first during a coordination period of up to 30 months. This happens regardless of how many employees your employer has. This is also true if you are covered under retiree insurance.
If you are only eligible for Medicare because you suffer from ESRD (and not because of your age), this coordination period begins when you become eligible for Medicare. While your group health plan/COBRA coverage will be billed first for Medicare-covered services, including ones that are outside of ESRD-related medical costs, Medicare may pay second for other Medicare-approved medical expenses.
Receiving Veteran's Benefits
If you receive veteran’s benefits and have enrolled in Medicare, the VA will act as your primary payer. Though you are not required to enroll in Part B when receiving VA benefits, doing so may be in your best interest. Medicare coverage expands beyond VA authorized services and facilities, so if you have to visit a non-military hospital in an emergency, your health care services won’t be covered unless you have Medicare.
Plus, if you delay your Part B enrollment, you could face late enrollment penalty fees should you lose your veterans’ benefits or decide to enroll in Medicare down the line. While you’re covered by VA benefits, you won’t need to enroll in Part D drug coverage. If you lose your drug coverage, you will have to enroll in a drug plan within two months so as to avoid the Part D late enrollment penalty fee.
Receiving TriCare or Military Retiree Health Benefits
As long as you are still on active duty, you and your spouse will continue to receive TriCare benefits, even if one or both of you is over the age of 65. For active-duty military enrolled in Medicare, TriCare pays first and Medicare pays second.
But if you are retired, you and your spouse are switched to the TriCare For Life (TFL) program once you turn 65 (and once your spouse turns 65). At this point, you must enroll in the federal Medicare program. The same rule applies if you are retired and you become eligible for Medicare due to a disability.
In most cases, Medicare pays first, and TFL pays second. If you fail to enroll in Medicare at this point, TriCare cannot pay for any medical services that could be covered by Medicare. As is the case with VA benefits, you don’t need Part D coverage if you receive military retiree health benefits. You don’t have to pay a premium for your TriCare coverage, but you do have to pay your Medicare Part B monthly premium.
There are some other, less common situations in which you may have to coordinate benefits between Medicare and some other type of health insurance coverage:
- Indian Health Service (IHS): If you are enrolled in both Medicare and the Indian Health Service (IHS), Medicare becomes your primary insurer and the IHS pays second. The only exception to this is if you have a group plan through an employer who has 20 or more employees, in which case your group plan pays first.
- Federal Black Lung Benefits Program: For beneficiaries of the Federal Black Lung Benefits Program, Medicare is the primary insurer for all health care costs not related to black lung disease. The Federal Black Lung Program only covers services related to black lung disease.
- No-Fault or Liability Insurance After an Accident: If you have been in an accident and receive no-fault or liability insurance and are also covered by Medicare, your accident insurance will pay first. Medicare pays second for covered services related to your accident.
- Workers’ Compensation Coverage: Workers’ compensation always pays first for services related to a workers’ compensation claim. Medicare may make a conditional payment, which must be repaid to Medicare when a settlement, judgment, or award is made.
So what do I do if I have Medicare coverage and some other form of health insurance?
If you find yourself in one of the situations listed above, be sure to alert Medicare of your health insurance coverage details. When you first enroll in Medicare, be sure to carefully fill out the “Medicare Initial Enrollment Questionnaire”, where you will detail any additional health insurance plan that you may be enrolled in. The federal government will probably not be aware of your other insurance coverage, and insurance companies do not always have the obligation to get in contact with Medicare.
If you have any questions regarding your other insurance coordinates with Medicare, or even about general Medicare eligibility, reach out today for a free consultation with a licensed insurance agent.