Medicare beneficiaries do not have to rely exclusively on Medicare for their healthcare coverage. People can use other insurance plans to allow them access to more services and lower their healthcare spending.
If someone has two different forms of coverage, the primary payer covers most costs, and the secondary payer then steps in to cover some or all remaining expenses.
With Medicare, secondary payers contribute to copayments and coinsurance. Usually, Medicare is the primary payer, although sometimes it can act as the secondary payer.
This article looks at Medicare as a secondary payer and how it works with other insurers. It also discusses the benefits of having two insurers and who pays first. It then looks at how the claims process works with both primary and secondary payers.
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.
A person can choose to have more than one insurance plan to cover their healthcare costs and Medicare works with other insurance providers to give people comprehensive coverage.
Each insurance pays their share of the healthcare service or products that someone receives.
Medicare secondary payer (MSP) means that another insurer pays for healthcare services first, making them the primary payer.
The secondary payer covers some or all of the remaining costs that the primary payer leaves unpaid.
When someone has two insurers, they benefit from broader healthcare coverage. Each insurer could cover services that the other does not, such as dental care, eye examinations, or alternative health therapies.
As an example, a primary insurer may offer prescription drug coverage, meaning that a person with original Medicare would not need a separate Medicare Part D plan or a Medicare Advantage plan that includes prescription drug coverage. This could lower a person’s overall healthcare costs.
If someone needs to stay in a hospital or a nursing facility for a long time, they may find it beneficial to have two insurers. For example, an individual’s primary insurer would pay up to their limits, and Medicare Part A benefits would kick in much later, extending the coverage period.
Having two insurance plans could mean a person has two monthly premiums. For most Medicare beneficiaries, this means they have the standard Part B premium, plus the premium for the primary insurer.
Careful consideration of the overall costs could mean a person’s expenses increase or decrease with a secondary insurance plan, but since a secondary payer could cover most out-of-pocket expenses, a person may find they save money despite paying two premiums.
Most people use Medicare as their primary payer. This means that Medicare receives a bill first, and pays for any covered healthcare services. If Medicare does not cover the service, the bill then goes directly to the secondary payer.
If Medicare is a secondary payer, the situation is the reverse. The primary payer pays first and passes the remaining amount to Medicare.
Medicare may not pay the entire outstanding amount, and an individual may still have out-of-pocket expenses.
When someone has more than one health insurance plan, the coordination of benefits rule decides which one pays first.
In many cases, when someone has two healthcare plans, Medicare is the primary payer.
Medicare remains the primary payer if someone is covered by:
- a group health plan (GHP), which can be through their own or a spouse’s employment if the employer has less than 20 employees
- a retirement benefit plan
- COBRA, which is a law that protects workers’ healthcare rights
- Medicare and COBRA, and they have a disability
Medicare may be the secondary payer when:
- a person has a GHP through their own or a spouse’s employment, and the employer has more than 20 employees
- a person is disabled and covered by a GHP through an employer with more than 100 employees
- an individual has ESRD, is protected by COBRA, and is within the first 30 months of Medicare eligibility
- a person has Medicare and has an accident involving no-fault or liability insurance
- an individual is covered by workers’ compensation
The calculations involved depend on the coverage that the insurance provider offers, and who is paying first.
For example, if someone has an invoice from a doctor for $200, the primary payer steps in first to pay the amount outlined in the following example:
| Doctors invoice | $200 |
| Primary insurer | covers 80% of the cost $200 – 80% = $40 $40 passed to secondary insurer |
| Medicare as secondary insurer | Medicare also covers 80% of the cost $40 – 80% = $8 |
| Total out-of-pocket cost | $8 |
A healthcare provider will obtain primary insurance information from a person and then usually send an invoice directly to the insurer. Healthcare providers must have access to an individual’s insurance details for this reason.
Claims will be submitted to the primary insurer first. Depending on the insurer’s rules, and if they do not directly bill the insurer, a person may need to complete a form online or mail in a claim form. The primary insurer then processes the claim per plan benefits.
When Medicare is a secondary payer, the primary insurer must report the claim status to Medicare for their consideration.
If the primary payer does not pay claims within approximately 120 days, the healthcare provider may send a bill to the secondary insurer. If this is Medicare, they may make a conditional payment, which they then recover from the primary insurer.
The rules surrounding Medicare as a secondary payer depends on the a person’s primary insurance company.
An individual may contact The Benefits Coordination and Recovery Center (BCRC) at 855-798-2627 (TTY: 855-797-2627) who can help to answer questions.
People can choose to have additional health insurance besides Medicare.
Although Medicare is typically the primary payer, under certain circumstances, it is the secondary payer.
The rules that decide if Medicare is the primary or secondary payer are complex.
Individuals with two types of health insurance benefit from comprehensive coverage and may find they save money even though there may be an additional premium to pay.