Medicare has specific rules about working alongside an employer’s health plan. The primary insurer and costs will depend on the person’s age, as well as how many people the employer plan covers and whether a multi-employer plan is in place.
Medicare is a form of healthcare insurance for people aged 65 years and older. Some younger people with specific medical conditions may also be eligible.
When a person has more than one health insurer, the coordination of benefits rules determine which plan pays first.
This article discusses how Medicare works with employer health plans, including the processing of claims and the out-of-pocket costs.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
When an individual first sends a claim to Medicare, the Centers for Medicare & Medicaid Services (CMS) will provide a Medicare Secondary Claim Development Questionnaire to confirm whether a person has more than one health insurance policy.
Medicare can be the primary or secondary payer, with the coordination of benefits rules determining which it is in each case.
The primary payer will be the first to receive a person’s healthcare claims and will pay eligible costs up to the plan’s coverage limit.
If there are costs that the primary payer does not cover, they may pass the claim to the secondary payer for processing.
A person can help ensure that medical claims go to the right insurer by:
- responding to Medicare Secondary Claim Development Questionnaire letters by the given deadlines
- telling the Benefits Coordination & Recovery Center (BCRC) about health insurance changes that affect the person or their spouse
- telling a doctor or another healthcare provider if they have more than one insurance plan, including Medicare
Deciding the primary insurer
The coordination of benefits rules decide when Medicare pays first. They also ensure that:
- the correct insurer pays claims
- Medicare shares eligibility data with other health insurers, including employer insurance
- claim payments do not exceed 100% of the total healthcare provider charges
Medicare as primary payer
Medicare is the primary payer when a person:
- is eligible for Medicaid
- is under 65 years of age, has a disability, has a group health plan, and works for a company with fewer than 100 employees
- has a group health plan and works for a company that has fewer than 20 employees
- is aged 65 years or older, retired, and the spouse of someone over the age of 65 years with a group health plan
- has a disability, is retired and under 65 years of age, and has insurance with a past employer
If a person aged 65 years or older has Medicare and more than one other health plan, they should contact the BCRC at 855-798-2627.
The National Association of Insurance Commissioners set the standard for the insurance industry. Under the coordination of benefits rules, the primary payer provides benefits as though a secondary plan does not exist.
The remaining charges will go to the secondary payer, which provides benefits based on the plan rules.
In this example, Medicare is the primary insurer.
A person has a charge of $100 for a consultation with a family doctor. They have met their yearly deductible.
Medicare covers 80% of the consultation cost, leaving 20% to pay:
20% x $100 = $20
Medicare may then forward the claim to the secondary insurer, detailing the Medicare-covered costs.
The secondary insurer also covers 80% of eligible costs, leaving 20% to pay:
20% x $20 = $4
A person is then responsible for the remaining out-of-pocket cost of $4.
A person’s out-of-pocket costs include deductibles for both insurers.
Although a person must meet the deductible for both insurers, the secondary insurer must credit the deductible amount as if there were no primary insurer.
For example, the primary insurer’s deductible could be $100, and the secondary insurer’s deductible could be $120.
The first $100 that a person pays out of pocket will cover both companies’ deductibles. The person must then pay the remaining $20 to the secondary insurer.
Healthcare providers submit claims to the primary insurer first. Providers who participate with Medicare, which is known as accepting assignment, will usually send a claim directly to Medicare for consideration.
The primary insurer must consider the benefits that the person is eligible for without factoring in a secondary insurer.
After the primary insurer has paid for eligible costs in line with plan benefits, they may submit the remaining claim costs to the secondary insurer.
If this does not happen, a person may submit the claim to the secondary insurer themselves.
Medicare can work with other health plans, including employer coverage, and there are rules to decide which plan pays first.
Either a person or a healthcare provider can submit a claim to the primary insurer first, who will consider the bill as though there is no secondary insurer.
Once the primary insurer has covered the expenses, the secondary payer will consider the remaining costs.
Out-of-pocket expenses may also still apply.