Many people start Medicare while they still have another type of health insurance. You may have coverage through an employer, a spouse’s job, a retiree plan, Medicaid, military benefits, or an accident policy.
When more than one health plan could pay for the same medical care, Medicare uses a process called coordination of benefits. This process helps determine which insurance pays first and which one may pay some of the remaining costs.
Knowing how this works can help you avoid claim delays, unexpected bills, and gaps in coverage. The details can depend on your situation, so it is important to confirm how your own plans work together.
What does coordination of benefits mean?
Coordination of benefits simply means that your insurance companies work out who pays a claim first.
The plan that pays first is called the primary payer. It pays its share of the covered bill first. The other plan is called the secondary payer. It may pay some, all, or none of the costs left after the first plan pays.
Having two types of insurance does not always mean both plans will pay every remaining dollar. Each plan has its own rules, covered services, deductibles, copays, provider networks, and payment limits.
For example, if you have Medicare and an employer health plan, one plan may pay first for a doctor visit. The second plan may then review the balance based on its own benefits.
When does Medicare pay first?
Medicare may pay first in several common situations. One example is when you have employer coverage through a company with fewer than 20 employees and you are eligible for Medicare because you are 65 or older. In that situation, Medicare generally pays first and the employer plan may pay second.
Medicare may also pay first if you have retiree health coverage. Retiree coverage often works as secondary coverage after Medicare, although the specific rules can vary by former employer and plan.
Medicare may be the primary payer when you have a Medicare Supplement plan, also called Medigap. A Medicare Supplement is designed to help with certain out-of-pocket costs left by Original Medicare. Original Medicare pays its approved share first, and the Medicare Supplement plan may then pay its share according to the policy benefits.
If you have Medicare and a stand-alone dental, vision, or hearing plan, Medicare and that separate plan usually cover different services. In that case, there may be little overlap to coordinate.
When does another insurance plan pay first?
Another insurance plan may pay before Medicare in some situations. A common example involves active employer coverage.
If you are 65 or older and covered by a current employer plan from a business with 20 or more employees, the employer plan generally pays first. Medicare may pay second. This can apply to coverage from your own current job or, in many cases, a spouse’s current job.
Rules can be different for people who qualify for Medicare because of disability or because they have end-stage renal disease. The size of the employer and the reason you qualify for Medicare can affect who pays first.
Auto insurance, liability insurance, workers’ compensation, and no-fault insurance may also pay before Medicare when an injury or illness is related to an accident, workplace injury, or another covered event. Medicare may make a conditional payment in certain cases, but it may need to be repaid if another insurer is responsible for the bill.
How does Medicare work with retiree coverage?
Retiree coverage is health insurance offered by some former employers or unions after you stop working. It is not the same as active employer coverage.
In many cases, Medicare becomes the primary payer once you retire, and the retiree plan pays second. Some retiree plans require you to enroll in both Medicare Part A and Part B when you become eligible. If you do not enroll, the retiree plan may pay less or may not pay certain claims.
Before delaying Part B because you have retiree coverage, check with the benefits administrator. Retiree coverage generally does not work the same way as coverage from active employment. It may not protect you from a Part B late enrollment penalty or give you the same enrollment options later.
What about Medicare and Medicaid?
People who have both Medicare and Medicaid are sometimes called “dual eligible.” In most cases, Medicare pays first for Medicare-covered services, and Medicaid may help pay certain remaining costs if the person qualifies.
Medicaid rules vary by state. The help available may depend on income, assets, and the type of Medicaid program. Some people may also qualify for a Medicare Savings Program, which can help with certain Medicare costs.
What should you do if you have more than one insurance plan?
The most important step is to make sure each insurer has accurate information about your other coverage. This helps providers send claims to the right place.
- Tell your doctor’s office, hospital, and pharmacy about all of your insurance coverage.
- Keep your Medicare card and other insurance cards available for appointments.
- Call your employer benefits office if you have coverage through active work or retirement.
- Review your plan materials to see whether you need to use certain doctors, hospitals, or pharmacies.
- Check your Medicare Summary Notice and other explanation of benefits statements for claim errors.
- Report changes, such as retirement, a new job, divorce, or the loss of other coverage, as soon as possible.
You may also receive a Medicare questionnaire asking about other health insurance. It is a good idea to complete it promptly. Medicare uses this information to help determine whether it should pay first or second.
Can you keep other insurance after enrolling in Medicare?
In many cases, yes. You may be able to keep employer coverage, retiree coverage, Medicaid, military-related benefits, or other insurance after you enroll in Medicare. But keeping another plan may not always be necessary or cost-effective.
For instance, a person with strong active employer coverage may decide to delay Part B if they qualify for a Special Enrollment Period later. Another person may find that Medicare plus a Medicare Supplement and Part D prescription drug plan better fits their needs after retirement. The right choice can depend on your health needs, the size of the employer, prescription coverage, provider access, and the rules of each plan.
Benefits, premiums, and coordination rules can vary by plan, carrier, employer, and state. Before making changes, consider reviewing both plans carefully so you understand who pays first and what costs may remain.
If you are sorting through Medicare and another health plan, Eric can help you understand how Medicare Supplement coverage may fit into your situation. Reach out for free, no-pressure help reviewing your options.