What happens if I have Medicare and private insurance?
How does Medicare coordinate benefits with private health insurance or employer coverage?
When you have both Medicare and private health insurance (such as employer-sponsored coverage), the two types of insurance work together to pay for your healthcare costs. This is called coordination of benefits. Here's how Medicare coordinates with other types of insurance and what you need to know about which plan pays first:
1. Who Pays First: Medicare or Private Insurance?
The primary insurance (the one that pays first) depends on factors such as your age, employment status, and the size of your employer, if you have employer-sponsored coverage. Here’s how the coordination works in different situations:
A. If You’re 65 or Older and Still Working with Employer Coverage:
Employer with 20 or more employees:
Your employer insurance is the primary payer, meaning it pays first.
Medicare is the secondary payer, covering costs not paid by your employer insurance (such as deductibles or coinsurance).
You can choose to delay enrolling in Medicare Part B if your employer insurance provides creditable coverage (as good as Medicare). However, once you retire or lose your employer coverage, you’ll need to enroll in Part B to avoid penalties.
Employer with fewer than 20 employees:
Medicare is the primary payer, meaning it pays first.
Your employer insurance is the secondary payer, covering costs that Medicare doesn’t pay.
In this case, you should enroll in Medicare Part B as soon as you’re eligible to avoid gaps in coverage.
B. If You’re Under 65 and Have Medicare Due to Disability:
Employer with 100 or more employees:
Your employer insurance is the primary payer.
Medicare is the secondary payer.
Employer with fewer than 100 employees:
Medicare is the primary payer.
Employer insurance is the secondary payer.
2. Medicare and Retiree Health Coverage:
If you’re retired and have retiree health coverage from a former employer, Medicare is the primary payer, and your retiree insurance pays secondary.
Retiree coverage often helps pay for deductibles, copayments, or services not covered by Medicare. It’s important to enroll in Medicare Part B once you become eligible, as most retiree plans require it to avoid gaps in coverage.
3. Medicare and COBRA Coverage:
COBRA allows you to continue your employer’s health coverage for a limited time after leaving your job. However, Medicare typically becomes the primary payer once you’re eligible for Medicare, and COBRA pays secondary.
If you are already on Medicare when you become eligible for COBRA, you can continue COBRA coverage. However, if you become eligible for Medicare while on COBRA, you will need to enroll in Medicare Part B to ensure full coverage.
4. Medicare and Marketplace Health Insurance:
Once you become eligible for Medicare, you typically do not need Marketplace (Affordable Care Act) coverage. Medicare becomes your primary insurance.
If you continue a Marketplace plan after enrolling in Medicare, Medicare will pay first. The Marketplace plan may not pay for services covered by Medicare, and you might lose premium tax credits or subsidies when you’re eligible for Medicare.
It’s usually recommended to transition to Medicare to avoid paying for redundant coverage.
5. Medicare and Long-Term Care Insurance:
Medicare covers short-term skilled nursing care after a hospital stay, but it does not cover long-term care or custodial care.
Long-term care insurance helps cover services like nursing home care, assisted living, or in-home care. This insurance typically kicks in where Medicare leaves off, offering coverage for extended care services Medicare doesn’t cover.
6. Medicare and Medigap (Medicare Supplement Insurance):
Medigap plans are designed to work with Original Medicare. Medicare pays first for covered services, and Medigap helps cover out-of-pocket costs like deductibles, coinsurance, and copayments.
If you have a Medicare Advantage Plan (Part C), you cannot have a Medigap plan, as Medicare Advantage plans bundle benefits and often have their own out-of-pocket limits.
7. Medicare and Veterans Affairs (VA) Benefits:
If you have Veterans Affairs (VA) benefits and Medicare, the two programs do not coordinate. You can use either Medicare or VA for care, but not both at the same time for the same service.
VA benefits cover care at VA facilities, while Medicare covers services at non-VA facilities. You may use both programs to maximize your coverage, but you’ll need to understand where to go for specific care.
8. What Happens If Both Insurers Deny Payment?
If both your private insurance and Medicare deny payment, you or your healthcare provider may need to file an appeal. In some cases, Medicare Secondary Payer (MSP) rules apply, and claims can be reconsidered by Medicare.
Key Takeaways:
The primary payer (Medicare or private insurance) depends on whether you’re working, retired, and the size of your employer.
Medicare is typically primary for retirees and individuals with COBRA or Marketplace plans, while private insurance is primary if you’re still working for a large employer.
For specific services like long-term care, Medicare does not cover ongoing custodial care, and you may need long-term care insurance.
For personalized guidance on how Medicare coordinates with your private insurance or employer coverage, schedule an appointment with a Tsunami Advisor here: Schedule an Appointment.
