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Medicare: How it works with other insurance

You've become eligible for Medicare, but you already have other health insurance. What should you do?

This is a common question for people who turn 65. You're still working and have employer-based health insurance or you're retired and have coverage through your former employer. Or maybe your spouse has insurance and that plan covers you.

There are many ways in which you might be eligible for Medicare and still have other health insurance.

In this guide, we'll take you through what happens if you already have health insurance and are now eligible for Medicare and we will explain coordination of benefits (COB), which decides the health insurance plan that pays first when you have dual health insurance plans.

What happens if you have other health insurance besides Medicare?

Health insurers have policies in place to guide them when people have multiple health insurance plans. It's called COB, which protects insurance companies from making duplicate payments or even reimbursing for more than the healthcare services cost.

Insurance providers work together to coordinate benefits and they use COB policies to figure out who is the primary insurer and who is secondary. The primary insurer pays first and then the secondary pays what the primary insurer didn't cover up to 100% of the total cost of care, as long as the plan covers that service. Whatever is left after that is your responsibility.

Let's look at an example of how this would work. You go to the doctor and the services cost $200. The primary insurer pays its amount. Let's say that's $100. The secondary insurer then picks up its portion -- if the plan covers those services -- up to 100% of the total cost. The rest is on you if the doctor is still owed money.

If Medicare is the secondary payer and the primary insurer doesn't swiftly enough. Medicare will make conditional payments to a provider when "there is evidence that the primary plan does not pay promptly." Medicare's Benefits Coordination & Recovery Center then recovers conditional payments from the slow-paying insurer.

Having dual insurance plans paying for your care can be a positive, but the downside is you pay two premiums. You may also have deductibles for two health plans. Plus, you would need to coordinate with two health insurance plans.

Dual health insurance plans might be a good idea, but you have to understand the costs and potential juggling of health insurance plans before you commit to it.

A good first step is to get the costs of premiums, office visits, and the total deductibles. You can then figure out how much care you usually receive and what kind of out of pocket costs you could save by having two insurance plans.

Which is the primary insurance plan?

Let's look at different scenarios in which you might have additional insurance to Medicare and see which of the insurers would pay first:

Group health insurance from workplace

Much like other insurers, Medicare has its own COB rules with commercial health plans. This sets up a game plan as to which one pays first.

Here's how Medicare payments work if your employer covers you:

  • If you work for a company with fewer than 20 employees, Medicare is usually considered primary and your employer is secondary.
  • If you work for a larger company, your employer is primary and Medicare is secondary.
  • If Medicare is the secondary payer, it will pay based on what the employer paid, what is allowed in Medicare and what the doctor or provider charged. You will then have to pay what's left over.

Please note that if you decide to drop your employer-based plan when you become eligible for Medicare, you might not be able to get back onto your employer plan. You'll want to check with your company's benefits administrator to know before deciding to drop your employer coverage.

Also, you don't have to sign up for Medicare when you become eligible on your 65th birthday. Medicare gives you three months after your birthday to make the decision. There is also a special enrollment period when you or your spouse retires and potentially loses health insurance. That period lasts eight months.

However, if you get insurance through your employer or your spouse's company and you decide after the enrollment period to sign up for Medicare, you may need to pay a 10% penalty on your monthly premiums.

Individual or Marketplace health insurance plan

If you keep your individual health plan (bought directly from an insurer) or Marketplace health insurance plan, Medicare pays first. However, there is no reason normally to keep an individual or Marketplace plan once you have Medicare. Medicare isn't part of the Marketplace, if you have Medicare Part A you're considered coverage (for penalty purposes). Once you have Medicare, it is illegal for someone to sell you a Marketplace or individual market policy. You're ineligible for tax credits or other savings, so if you were to keep the Marketplace plan, it would be at full price. Marketplace plans generally has no COB with Medicare, so it wouldn't work as secondary insurance.

Retiree insurance

You can sign up for Medicare even if you're retired and get health insurance through a former employer.

Medicare generally pays first if you have a health plan through your former employer. The group health plan pays second.

If you're retired and you're on your spouse's employer's health plan and the business has fewer than 20 employees, then Medicare pays first. If it's a larger company, the business' health plan pays first. Medicare pays second.

If you are a retired federal employee, Medicare is the primary payer with the Federal Employees and Health Benefits Program the secondary payer.

Military retiree and VA benefits

The Veterans' Affairs isn't an insurance plan, so if you want coverage for services outside of the VA system, you'll want to get Medicare.

If you have both veterans' benefits and Medicare, and you choose to use your VA benefits instead of Medicare, you must be treated at a VA facility to be covered by your VA benefits. You can, however, ask the VA prior to treatment to authorize services elsewhere.

Medicare could cover services in which the VA doesn't pay for if the VA authorizes services in a non-VA hospital and the VA doesn't pay for all of the services you receive during a hospital stay.

Medicare may also pay part of your copayment if you receive VA-authorized care by a doctor or hospital not part of the VA. Medicare doesn't cover services within the VA.

Unlike the other scenarios on this page, there is no primary or secondary payer when it comes to VA vs. Medicare. Having both gives veterans the option to get care for either VA or civilian doctors depending on the situation.

TRICARE (coverage for service members)

Medicare usually is the primary payer for covered services for active-duty military with TRICARE. TRICARE is secondary and may pay Medicare deductibles and coinsurance, as well as for some services not covered by Medicare. You'll then pay for the services that neither Medicare nor TRICARE covers.

For those who retire from the military, you must sign up for Medicare Part B (medical insurance) to maintain your TRICARE coverage. If you don't sign up for Part B, you will lose TRICARE coverage.

TRICARE FOR LIFE (TFL) is what TRICARE-eligible individuals have if they carry Medicare Part A and B. TFL benefits include covering Medicare's deductible and coinsurance.

The exception is if you need medical attention while overseas, then TFL is primary. Medicare only provides coverage in the U.S. and U.S. Territories. If you live overseas you must keep Medicare Part B active in the U.S. to remain eligible for TFL, even though Medicare doesn't cover you overseas.

COBRA

COBRA lets you keep your employer group health insurance plan for a limited time after your employment ends. This continuation coverage is meant to protect you from losing your health insurance immediately after you lose a job.

If you're on Medicare, Medicare pays first and COBRA is secondary. The one exception is for people with End-Stage Renal Disease. In that case, COBRA pays first.

Your COBRA coverage usually ends if you enroll in Medicare. You might be able to get an extension on your COBRA if Medicare doesn't cover some of the services offered on the COBRA plan, such as dental insurance. In that case, it might make sense for you to keep COBRA.

You can also enroll in COBRA if you become eligible and you already have a Medicare plan. In that case, you'll want to see whether the extra cost for COBRA is worth it. For instance, it might be a good idea if you have high medical expenses and/or the COBRA plan has generous offerings.

Medicaid

You're able to have both Medicare and Medicaid. In fact, it's fairly common for people in nursing homes to have both coverage help pay for their care.

Medicaid is always the payer of last resort when it pertains to COB. So, Medicare will pay first; Medicaid is the secondary payer. You'll want to make sure you visit in-network providers for both Medicare and Medicaid, so you get covered by both plans.

When Medicare doesn't pay

Medicare doesn't normally pay for medical services when other insurance entities would provide coverage instead. It might provide secondary coverage. This includes:

  • Injuries related to auto accidents (PIP, Medpay, uninsured motorist, underinsured motorist or at-fault party's bodily injury auto insurance is primary, Medicare is secondary)
  • Third-party liability (Example: when can make a claim under someone's homeowner's, product liability, malpractice policy) Medicare will provide secondary coverage.
  • Work injury or illness (worker's compensation)
  • Illness related to mining (claim under Federal Black Lung Benefits program)

However, if your claim is denied under these areas, Medicare will may payments - to the extent that the services are covered under Medicare.

Side-by-side comparison

Let's take a look at each scenario and see which would serve as the primary and secondary payer.

ScenarioPrimary payerSecondary payer
Employer with 20 or more employees Employer Medicare
Employer with fewer than 20 employees Medicare Employer
On spouse's insurance and employer has 20 or more employees Employer Medicare
On spouse's insurance and employer has fewer than 20 employees Medicare Employer
Retiree from non-federal job with health insurance from former employer Medicare Employer
Retired and spouse's employer's plan for business with fewer than 20 employees Medicare Employer
Retired and spouse's employer's plan for business with 20 ore more employees Employer Medicare
Retired federal employee Medicare Federal Employees and Health Benefits Program
TRICARE Medicare TRICARE
COBRA Medicare COBRA
Medicaid Medicare Medicaid
Under 65, disabled and have coverage through a family member's employment and employer has 100 or more employees Employer Medicare
Under 65, disabled and have coverage through a family member's employment and employer has less than 100 employees Medicare Employer
Individual/ACA plan Medicare

Generally, there is no coordination of benefits between Medicare and an Individual policy 

Workers' compensation Workers' comp Medicare

Veteran with Veteran Benefits

Veteran's Aaffairs pay for VA-authorized services & Medicare pays for Medicare-covered services

As you can see, there are many scenarios and results when it comes to COB and Medicare. When deciding whether to have dual health insurance plans, you should run the numbers to see whether paying for two plans would be more than offset by having two insurance plans paying for medical care. If you have further questions about Medicare and COB, call Medicare at 855-798-2627.

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