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What happens when you have employer health insurance along with Medicare?

Medicare | Apr 18, 2016

When you have an employer health insurance plan in addition to Medicare, each insurer will take on a different role in handling your medical bills. One will become what is called the primary payer and the other will become the secondary payer. Which is which depends on a few key facts about both your Medicare eligibility and your employment situation.

"A primary payer covers as much of the costs of your medical bills as the coverage allows."

Primary vs. secondary payers
Before diving into how one insurer becomes a primary payer and the other becomes secondary, it is important to lay out the difference between the two.

A primary payer is in charge of covering as much of the costs of your medical bills as the coverage will allow. A secondary payer is there to cover the costs the primary payer can not.

This primary/secondary system, however, does not guarantee that 100 percent of your medical costs will be covered. As Medicare.gov explained, the secondary payer is not always in a position to cover all of the costs leftover after the primary payer's coverage ends.

What determines who is the primary payer?
If after enrolling in Medicare you are still receiving health benefits from an employer, the specific scenarios surrounding your employment and Medicare eligibility will dictate whether your employer or Medicare is the primary payer. According to Medicare Interactive, the employer becomes the primary insurer if:

  1. You enrolled in Medicare because you reached the age of 65 and you or your spouse are employed at a company that has 20 or more employees
  2. You enrolled in Medicare due to a disability and the employer insurance you are using comes from a company with 100 or more employees

If, on the other hand, you either have a disability but your employer insurance comes from a company with less than 100 employees or you have turned 65 and your employer insurance comes from a company with less than 20 employees, Medicare will be your primary insurer.

"Medicare's Coordination of Benefits program helps non-Medicare insurers determine their role in the coverage process."

How it all works: Coordination of Benefits
Medicare's Coordination of Benefits program helps the non-Medicare insurers determine their role in the coverage and payment process and coordinates them with Medicaid. The COB works with the outside insurers to make sure they have access to important Medicare eligibility data and receive Medicare-paid claims. That way, they know what has been paid and what they still need to cover. In addition, the COB is there to make sure that the same insurance payments are not accidentally made twice.

Keep in mind that in order for the COB to take over the task of coordinating all of these payments, your private insurance company must enter into an agreement with the Benefits Coordination & Recovery Center. If an agreement is made, these payments are automatically determined for you. Otherwise, it will be up to you to coordinate payments with your non-Medicare insurer.

Conditional payments
If your primary payer is not Medicare and is late making a payment, it is possible Medicare will cover the costs in what is called a conditional payment. This part of the process is meant to help you avoid having to pay your full medical costs out of pocket at any time. Medicare.gov explained that when Medicare makes a conditional payment, the amount must be repaid to them if and when you finally receive the payment from the primary insurer.

Talk to your employer when you become eligible for Medicare
Medicare Interactive emphasized the importance of asking your employer how your health insurance plan will change when you become eligible for Medicare. In some circumstances, you will be required to make Medicare your primary payer once you are eligible to enroll. If you fail to enroll, your company may ask for reimbursement from you for any medical costs they covered during the time you could have had Medicare as your primary insurer.

Open communication is key to making sure you have the right health plan that will also save you the most amount of money.