Medicare is the primary insurance provider for most retirees aged 65 and older. However, there are some circumstances where Medicare will not have the primary payment responsibility for your health care. Here are five common situations when Medicare becomes your Secondary Payer.
1. Americans and spouses working for companies with insurance
While 65 is the official retirement age in the United States, many Americans over the age of 65 continue to work either full-time or part-time. When these Americans are covered by an Employer Group Health Plan (GHP), Medicare may become their secondary payer.
Many Medicare beneficiaries continue to work after the designated retirement age because they want to grow their wealth. They still feel fit enough to work and enjoy thinking about the comfortable retirement they will eventually enjoy when they leave the workforce.
The following adults with Employer Group Health Plans will find the employee insurance is their primary payer and Medicare their secondary:
- Americans aged 65 or older working for companies with 20+ employees or multi-employer groups employing 20+ people
- Americans aged 65 or older with spouses working for companies with 20+ employees or multi-employer groups employing 20+ people
- Self-employed Americans aged 65 or older with insurance issued by an employer with 20+ employees or multi-employer groups employing 20+ people
Americans aged 65 or older and working for small organizations (less than 20 employees) will still have Medicare as their primary payer, even if they have a employer insurance.
2. Disabled Americans covered by large company insurance
The Medicare Secondary Payer rules apply to many disabled Americans covered by employer insurance, excluding those with Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) continuation coverage. For Medicare to be a secondary payer, the plan must come from a large company with 100+ employees.
Example: Dan is taking several months off work after struggling with health issues. His large employer has agreed his job will be there waiting for him when he feels ready to return. Medicare will become his secondary payer during this time.
Medicare Secondary Payer rules apply when a disabled American not actively working for his or her large company meets one of the following criteria:
- Received disability payments from the company for no more than six months
- Retains employment rights in the industry and hasn’t been terminated
- Retains employment rights and membership in the employee organization (if health care coverage comes from the organization)
Note: the disabled person must not be receiving Social Security disability benefits. Otherwise, the Medicare Disability Plan becomes the primary payer.
3. Most Americans With End-Stage Renal Disease
Many individuals with end-stage renal disease find that Medicare is their secondary payer during a 30-month coordination period. This period starts when people with end-stage renal disease first become eligible for Medicare, even if they don’t sign up for it. Medicare Secondary Payer rules apply to the following people with end-stage renal disease in the 30-month coordination period:
- Americans covered by an employer plan (current or former employees)
- Americans covered by a COBRA plan
Example: Ivan found his employer health plan was the primary payer of his medical bills while he underwent treatments like dialysis for the first 30 months after being diagnosed with end-stage renal disease. He responded well to the treatment, and though his prognosis didn’t change, he lived for 36 months. Medicare became the primary payer for the final six months of his life.
4. Americans with no-fault insurance or liability insurance
Medicare beneficiaries with no-fault and liability insurance policies may see Medicare becoming their secondary payer.
Example: Camille has a comprehensive no-fault insurance policy. She sustained serious injuries in a car accident that left her in the hospital for several months. During her recovery, her no-fault insurance policy became her primary health care payer, while Medicare became her secondary payer.
5. Americans injured while working
Worker’s Compensation Insurance protects workers against illness and injury caused by workplace accidents or incidents. Should a worker need to make a claim on his or her employer’s worker’s compensation, the insurance provider becomes the primary health care payer.
This situation is a little different to those discussed above because, generally, Medicare won’t pay for any part of an illness or injury covered by worker’s compensation. However, if the insurance company refuses to pay all or part of a worker’s compensation claim, Medicare may make an exception. Medicare may also make a conditional payment if the worker’s compensation insurer does not pay promptly for medical treatment. Such payments are repayable after worker’s compensation pays out.