Understanding your Medicare costs can be confusing when there are two or more insurance policies interacting with one another. Read on to learn:
- What coordination of benefits is when there are two insurance plans.
- Which coverage pays first when it comes to Medicare and other insurance.
- What to do when there is still payment due.
What Does Primary and Secondary Insurance Mean?
Coordination of benefits (COB) allows multiple insurance policies that work with Medicare to figure out their financial responsibilities. Each insurance program is assigned a status, such as primary or secondary payer. This status determines the order in which the plan pays and in which order. This policy ensures that your claims are paid without paying more than 100% of the claim. Medicare law determines who is the primary and secondary payers are in any claim:
- The primary insurance is the party that pays the claim first
- Secondary insurance pays after your primary insurance benefits for a claim are exhausted
What are the types of secondary insurance?
There are multiple types of secondary insurance policies that may interact with Medicare. You can use this guide to determine how your insurance will interact with Medicare.
- Medicaid: Medicaid is a state-run assistance program that serves low-income people, regardless of age. Medicaid is run by the state, following federal guidelines. Medicaid never pays first for services that Medicare covers. In this instance, Medicare is the primary insurance, and Medicaid is the secondary insurance.
- Employer coverage (companies with less than 20 employees): Employer coverage with less than 20 employees may or may not be secondary coverage. Medicare will be the secondary insurance if your employer joins other organizations to sponsor a multi-employer group health plan and at least one employer has 20 or more employees. Otherwise, Medicare is the primary insurance.
- Employer coverage(companies with more than 20 employees): With more than 20 employees, Medicare will become the secondary insurance. If your plan is a health maintenance organization (HMO) and you receive services out of network, the primary insurance or Medicare may pay your claims.
It’s important for you to speak to your employer about how your or your spouse’s policy is set up if you qualify for Medicare to ensure that you understand how claims are paid when you receive services.
Are Medicare Supplement Plans and Secondary Insurance the Same Thing?
Yes. Medicare Supplement (Medigap) plans are a type of secondary insurance if you have Original Medicare, or Parts A and B.
Medicare supplements fill the gaps when it comes to Medicare. There are two instances where a Medicare supplement will serve as the primary insurance when you have Medicare:
- After Medicare hospital benefits are exhausted, the Medicare supplement plan will be the primary insurance for an additional 365 days. This is a feature of all Medicare supplement plans.
- If your Medicare supplement plan (Plan C, D, F, G, M, or N) offers Foreign Travel Emergency, your Medicare supplement plan will always be the primary insurance.
Understand your total estimated out-of-pocket costs before choosing a Medicare supplement. Medicare supplements have an additional cost besides Original Medicare. If you use the doctor or hospital infrequently, you may pay monthly premiums that exceed how much the Medigap plan covers in services. Assess your risk tolerance to see if other options are available and a good fit, such as a Medicare Advantage Plan.
Here is an example of how having two insurance plans may work with Medicare and a Medicare Supplement plan:
You have an inpatient hospitalization that costs $10,000. Medicare Part A has a deductible of $1,556. Medicare pays the balance above the deductible and then sends the bill to your Medicare supplement company, which pays the deductible for you as it falls under your policy’s coverage. You will not receive a bill from Medicare, your Medicare supplement insurance company, or the hospital, as the cost was met 100%.
If, for some reason, you had services that were not covered under Part A or Medicare, you would be responsible for your portion of any of the additional charges.
How Will Your Medical Costs Be Split Among Your Primary and Secondary Insurance?
The primary insurance will pay its share of your health costs first. After the primary insurance benefits are exhausted, the secondary insurance receives the remainder of the bill. The secondary insurance is then responsible for paying up to 100% of the remaining costs, provided it’s covered under the plan.
Will Medicare Ever Be The Secondary Payer?
Yes. Situations exist in which Medicare may be a secondary payer. These situations include:
- Accidents where there is no fault or liability are involved, such as a car accident
- Group plans where you, or your spouse, have an employer with more than 20 employees
- If you’re covered under workers’ compensation due to job-related injury.
- If you’re on active duty and enrolled in Tricare, Medicare is secondary
Medicare offers a quick guide for the most common situations where you may have a question about who is the primary payer. If you have questions about Medicare’s coordination with other insurances, call the Benefits Coordination & Recovery Center at (855) 798-2627. You will also want to make sure you tell your providers about any changes or additional coverages you may have when you get services.
What If I Still Owe Money After My Primary and Secondary Insurance Pay?
Once the coordination of benefits process is complete and both insurance policies pay their share, you may have a balance left over. Your doctor should then send you a bill and you will be responsible for the remaining balance.
Learn More From Our Sources
- CMS.gov | Coordination of Benefits | Last accessed October 2023
- HHS.gov | What is the difference between Medicare and Medicaid? | Last accessed October 2023
- Medicare.gov | Your guide to who pays first. | Last accessed October 2023
- Medicare.gov | How Medicare works with other insurance | Last accessed October 2023