Does Medicare Pay First is a very common question these days. That’s because people are working longer than ever, and often have other insurance coverage in place alongside Medicare.
In most cases of other coverage, one insurance becomes the primary payer, and the other insurance becomes the secondary payer. The primary payer will pay what it owes on those medical bills first, and then the secondary payer will kick in behind that. There are “coordination of benefits” rules that govern who pays first or second.
Here’s a brief overview of Who Pays First – Medicare or other coverage – in some of the most common situations.
Medicare and Retiree Coverage
If you have group health benefits through a former employer or a spouses’ former employer, Medicare pays first. This means you must be enrolled in both Medicare Parts A and B. After Medicare pays out its benefits, it will send the remainder of those bills on to your retiree health plan. Although some plans such as Federal Government Retirement and private pension plans you do not necessarily have to enroll in Part B. If you dropped or changed those plans you would need to seek immediate coverage form Part B so you do not incur a penalty.
Often retirees in this situation will ask us whether they also need a Medigap plan. The answer is that you only need one or the other, not both. If your retiree plan is affordable and you like the benefits, you can keep that plan. It will function as your secondary. If the retiree plan costs a lot or you don’t like the plan’s network or benefits, you could dis-enroll from the retiree plan and choose Medigap instead.
There is no need for there to be a third coverage, and that can often create billing nightmares when there are three insurances involved. Choose one or the other.
Medicare and Active Group Health Plan for Beneficiaries 65 or Older
Still working? Your group health plan insurance will coordinate with Medicare based on how many employees there are at your employer. Employer health plans with 20 or more employees will be primary and Medicare will be secondary. If there are less than 20 employees, then Medicare is primary and your group health plan is secondary.
Again, in both of these situations, you would not need a Medigap plan because you already have a primary and secondary payer. However if you work for a small employer (under 20) and the health plan at that small employer is expensive, you can compare costs with Medigap. Sometimes it’s actually cheaper to leave the group health plan and elect a Medigap or Medicare Advantage plan instead.
Medicare and Group Health Coverage for Beneficiaries Under 65
Some people qualify for Medicare early due to a disability. If that employee works for a company with less than 100 employees, Medicare will be primary. If the employer has more than 100 employees, the larger group health plan will pay first, and Medicare will pay secondary.
Medicare and COBRA
Medicare pays first for most people on COBRA, except in situations where your Medicare is awarded due to End Stage Renal Disease. There are certain enrollment periods surrounding Medicare and COBRA so you should always consult your employer’s plan benefits administrator for guidance. It’s important that you don’t miss enrolling in Part B before the 8th month of COBRA benefits. Not doing so could result in late enrollment penalties and delay in the start of your coverage.
Technically, you won’t need a Medigap plan until your COBRA is exhausted. However, COBRA benefis for people over 65 can often be enormously expensive. Be sure to compare costs/benefits against the cost of Medicare with a Medigap plan. Often we find the Medigap option to be significantly less expensive.
Medicare and Medicaid
Medicare is a federal health insurance program for people age 65 or older, and for people with certain disabilities. Medicaid is a joint federal and state program for people with limited incomes and assets. If you have qualified for both, Medicare will always pay first, and Medicaid will pay second. You should check to make sure that your providers participate in both Medicare and Medicaid networks.
People with both Medicare and Medicaid typically do not buy Medigap insurance because Medicaid already functions as secondary insurance. Read more about Medicare and Medicaid Here.
Medicare and VA Insurance
If you are entitled to both Medicare and Veteran’s benefits, you can have both. Medicare is neither the primary or secondary payer. Instead, each time you seek healthcare services, you will choose which benefits to use. If you wish to use your VA benefits, you must seek care from a VA facility. Many Veterans choose to have Medicare as well as VA benefits so that they have the freedom to treat with a civilian doctor if they wish to do so.
If you are a veteran who plans to use civilian doctors often, you have the option to purchase a Medigap policy that can pay after Medicare if you wish to do so. Another option is a Medicare Advantage plan, since those can often be less expensive than Medigap while still offering you an alternate place of care besides the VA clinic.
Medicare and TRICARE
Some people have both Medicare and TRICARE. In most circumstances, Medicare pays first for any covered services. TRICARE will pay second and can pick up some of the expenses like your Medicare deductibles and coinsurance. TRICARE may also pay for some services that Medicare does not cover. You will be responsible though for any services that neither program covers.
People with TRICARE typically do not need to purchase Medigap coverage because TRICARE will already be paying after Medicare and will pick up most of those leftover costs.
These are the most common situations when it comes to Who Pays First – Medicare or Other Insurance. There are less common double coverage situations out there too, such as Medicare and Workers Compensation or Federal Black Lung Benefits. There are also different rules for people with ESRD who also have group health coverage. You can consult the Medicare Who Pays First publication on Medicare’s website for additional information. You can also reach out to our team for help and we’ll be happy to help you think through your options.