How does Medicare work with other insurance?

Steven Mott by Steven Mott | Licensed since 2012
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This article was updated on: 07/05/2018

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Can you have both private insurance and Medicare? With more and more Americans over age 65 still working, coordination of benefits between Medicare and private insurance companies is fairly common. Over 9 million Americans over 65 were working as of January 2017, according to the United States Bureau of Labor Statistics. Some of these people have both private insurance and Medicare.

How does coordination of benefits work if I have both private insurance and Medicare?

Sixty-five is the age most people first become eligible for Medicare. Depending on the type of insurance coverage you had when you first became eligible for Medicare, you may be able to choose to have both Original Medicare and private employee (or union) health insurance. Original Medicare generally includes Part A (hospital insurance) and Part B (medical insurance).

Understanding how Medicare works when you have employer-sponsored or retiree health benefits may help you figure out your medical bills.  It’s important that you tell Medicare about your other insurance so Medicare and your other insurance can coordinate benefits. You do this when you first sign up for Medicare by completing the Medicare Initial Enrollment Questionnaire.

With coordination of benefits, who pays first?

When you have Medicare and private insurance, the “coordination of benefits” process helps determine who pays first.  You might have multiple “payers.”  The insurance that pays first is the primary payer. Your primary payer pays your medical bills up to the amount allowed by your coverage. Your secondary payer may pay for some portion of the services, and there still might be a balance for you to pay.

Sometimes, coordination of benefits may have Medicare as the primary payer, and your private insurance as the secondary payer, as in the following examples:

  • You are at least age 65, are still working, and have group health plan coverage through an employer with fewer than 20 employees.
  • You are at least 65 and covered by a retiree health plan through your former employer.

Sometimes, coordination of benefits may have Medicare as the secondary payer, and your private employer-sponsored group plan as the primary payer, as in the following examples:

  • You are at least age 65, are still working, and have group health plan coverage through an employer with 20 or more employees.
  • You’re under 65 with a disability, and you’re covered by group insurance by an employer with at least 100 employers.

What else do I need to know about coordination of benefits between Medicare and private insurance?

Coordination of benefits generally works this way: when Medicare is the primary payer, Medicare generally pays covered benefits once you have met your Medicare deductible before your employer sponsored coverage contributes. Your employer-sponsored group health plan may then pay its portion of the covered services not paid by Medicare as long as those services are covered by the group plan. When Medicare is the secondary payer, the employer-sponsored group health plan may pay any services covered by the plan before Medicare pays its portion of the Medicare-covered services.

Again, even when the primary and secondary payers help pay your bill, you may have an outstanding balance due. How much they might pay depends on what’s covered by your plan and what costs Medicare is responsible for covering.  For example, if Medicare is the primary payer and your employer-sponsored group health plan is the secondary payer and you have met your Medicare deductible, Medicare may pay 80% for most Medicare-covered services.  If your group health pays 80% for services covered by its plan, it may pay the other 20% of the bill, or it may pay only 80% of the remaining portion, leaving you to pay a small balance.  How much the secondary payer pays for covered services depends upon its rules of benefit coordination.

How might signing up for Medicare affect coordination of benefits?

What about signing up for Medicare while you still have employer group insurance? One decision you might face is whether to take both Medicare Part A (hospital insurance) and Part B (medical insurance).

Some people sign up for Medicare Part A when they first become eligible, because you typically don’t have to pay a premium for Part A if you’ve worked at least 10 years while paying Medicare taxes. However, if you have a high-deductible plan, like a Health Savings Account (HSA), and you sign up for Part A while still working, you might not be able to make contributions to your HSA plan. So before you decide whether to enroll in Medicare Part A, you probably want to find out how it works with your current plan.

You typically pay a monthly premium for Medicare Part B (medical insurance), so some people who still have employee coverage choose to delay enrolling in Part B until they no longer have employee coverage. However, employers with fewer than 20 employees may require you to take Part B when you turn 65. Talk with your employee health plan representative to find out how your plan works with Medicare.

Please note that many people are automatically enrolled in Part A and Part B, but that typically happens when you’re already receiving retirement benefits from Social Security when you become eligible for Medicare.

If you sign up for Medicare while you’re still covered by private insurance from your employer or union, coordination of benefits usually becomes necessary so that your medical costs may be covered, and aren’t accidentally paid twice for the same service.

Questions about Medicare and your private health insurance?

It may be a good idea to talk with your employee or retiree plan benefits representative before making your initial Medicare enrollment decisions.

You can call the Medicare Coordination of Benefits Contractor at 1-800-999-1118 (TTY 1-800-318-8782) 8:00 AM – 8:00 PM ET, Monday through Friday to get answers specific to your situation or if your situation changes. You’ll need to provide your Medicare number and one additional piece of information, such as your Social Security number or address, when you call.

If you have questions about coordination of benefits between Medicare and other insurance or your Medicare coverage options, I’d be happy to answer your questions. You can request a phone call or an email with information by clicking the appropriate link below.  To see a list of plans in your area, click the Compare Plans button below.

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