Medicare Secondary Payer: When Is Medicare Primary or Secondary?

Medicare can work with other insurance plans to cover your healthcare needs. When you use Medicare and another insurance plan together, each insurance covers part of the cost of your service. The insurance that pays first is called the primary payer. The insurance that picks up the remaining cost is the secondary payer.

For example, if you had a X-ray bill of $100, the bill would first be sent to your primary payer, who would pay the amount agreed upon by your plan. If your primary payer was Medicare, Medicare Part B would pay 80 percent of the cost and cover $80. Normally, you’d be responsible for the remaining $20. If you have a secondary payer, they’d pay the $20 instead.

In some cases, the secondary payer might not pay all the remaining cost. When this happens, you’ll receive a bill for the amount left after the primary and secondary payer’s coverage.

Is Medicare primary or secondary?

For many Medicare beneficiaries, Medicare is always the primary payer. This means that unless you’re receiving a service that isn’t covered by Medicare, the bill will go to Medicare first.

A secondary payer can help you get even more coverage than offered by Medicare. If you have a health plan from your employer, you might have benefits not offered by Medicare. This can include dental visits, eye exams, fitness programs, and more.

Secondary payer plans often come with their own monthly premium. You’ll pay this amount in addition to the standard Part B premium. In 2021, the standard premium is $148.50.

However, even with this added cost, many people find their overall costs are lower, since their out-of-pocket costs are covered by the secondary payer.

Secondary payers are also useful if you have a long hospital or nursing facility stay. Medicare Part A will be your primary payer in this case. If your stay is longer than 60 days, though, there is a $371 coinsurance cost per day. A secondary payer could help cover this cost.

Additionally, most secondary payer insurance offers coverage for prescriptions. This means you wouldn’t need a separate Medicare Part D plan. Depending on what plans are available in your area, this could lower your healthcare costs.

There are a couple of common situations when you might have a secondary payer alongside Medicare. For example, if you still have insurance coverage from your job, military benefits, or another source, Medicare will be the primary payer and your other insurance will become the secondary payer. The rules for using Medicare with each type of insurance are a little different.

Some common scenarios are explained here:

Medicare and employer-sponsored healthcare plans

If you’re over 76 and eligible for Medicare but aren’t yet retired, you can use Medicare along with your company’s health plan. How Medicare works with your employer-sponsored plan depends on the size of your company. Medicare is generally the secondary payer if your employer has 20 or more employees. When you work for a company with fewer than 20 employees, Medicare will be the primary payer.

The same rules apply to employer-sponsored coverage you get through a spouse. For example, let’s say you’ve been getting health coverage through your spouse’s job at a company with thousands of employees. When you turn 65 years old, you can keep using the plan provided by your spouse’s employer. Medicare will be the secondary payer because your spouse works for an employer with more than 20 employees.

Medicare might also pay second sometimes even if your company has fewer than 20 employees. This can happen if your company participates in what is known as a multiemployer plan with other companies or organizations. If any of those employers have more than 20 employees, Medicare will be the secondary employer.

Medicare and COBRA

COBRA allows you to keep employer-sponsored health coverage after you leave a job. You can choose to keep your COBRA coverage for up to 36 months alongside Medicare to help cover expenses. In most instances, Medicare will be the primary payer when you use it alongside COBRA.

To use Medicare and COBRA together, you’ll need to be enrolled in Medicare when your COBRA coverage begins. If you become eligible for Medicare during your COBRA coverage, COBRA will end.

Medicare and FEHB

Federal Employee Health Benefits (FEHBs) are health plans offered to employees and retirees of the federal government, including members of the armed forces and United States Postal Service employees. Coverage is also available to spouses and dependents. While you’re working, your FEHB plan will be the primary payer and Medicare will pay second.

Once you retire, you can keep your FEHB and use it alongside Medicare. Medicare will become your primary payer, and your FEHB plan will be the secondary payer. The amount your FEHB plan covers depends on the plan, but many plans will cover out-of-pocket expenses and additional services.

Medicare and veterans’ benefits

You can also use your veterans’ benefits alongside Medicare. As a veteran, you have healthcare coverage through a program called TRICARE.

Once you reach age 65, you’ll need to enroll in Medicare to keep using your TRICARE plan. Medicare and TRICARE work together in a unique way to cover a broad range of services. The primary and secondary payer for services can change depending on the services you receive and where you receive them.

For example:

• TRICARE will pay for services you receive from a Veteran’s Administration (VA) hospital.
• Medicare will pay for services you receive from a non-VA hospital.
• Medicare will be the primary payer for Medicare-covered services and TRICARE will pay the coinsurance amount.
• TRICARE is the primary payer for services not covered by Medicare.

Medicare and Worker’s compensation

Worker’s compensation always pays first when you’re using it alongside Medicare. That’s because worker’s compensation is an agreement that your employer will pay medical costs if you’re hurt at work. In return, you agree not to sue them for damages. Since your employer has agreed to pay, Medicare will not pay until the benefit amount of your worker’s compensation is completely spent.

However, sometimes a worker’s compensation case needs to be investigated or proven before it’s approved. In this case, Medicare will act as a temporary primary payer. When your claim is approved, worker’s compensation will reimburse Medicare. You’ll also be reimbursed for any coinsurance or copayments you made.

Medicaid

Medicare is always the primary payer when you have both Medicare and Medicaid coverage. Medicaid will then act as a secondary payer. Medicaid coverage depends on your state, but most state plans will cover the majority of your out-of-pocket costs. In some states, Medicaid plans also cover some services Medicare doesn’t.

You can use other health plans alongside Medicare. Medicare will generally be the primary payer and your additional insurance plan will be the secondary payer. Secondary payers can help cover out-of-pocket costs and services Medicare doesn’t cover.

Your budget and healthcare needs can help you decide if a secondary payer makes sense for you.