There are certain situations where Medicare will pay for your health care services after another insurance plan pays first. There are also situations where Medicare will pay for your health care services, but you will have to pay them back after an insurance settlement reach after an accident you are involved with that is not your fault. The determination of who pays first and second is called coordination of benefits and it can be confusing.
Medicare Coordination of Benefits
Medicare has developed a training presentation and workbook to help guide people through the coordination of benefits process. The Medicare training also addresses how individual health insurance purchased through either a state or the federal Marketplace will coordinate with Medicare benefits. Below are some of the highlights from the power point presentation and workbook, all of which can be downloaded at the end of the page.
2015 Coordination of Benefits Training Presentation Excerpts
Primary and Secondary Payers
It’s important to identify whether your medical costs are payable by other insurance before, or in addition to, Medicare. This information helps health care providers determine whom to bill and how to file claims with Medicare.
There are many insurance benefits you could have and many combinations of insurance coverage to consider before determining who pays and when:
- No-Fault Insurance
- Liability Insurance
- Workers’ compensation insurance
- Federal Black Lung Benefits Program
- Consolidated Omnibus Budget Reconciliation Act
- Retiree Group Health Plan
- Veterans Affairs Benefits
- TRICARE for Life
- Employer Group Health Plan
Depending on the type of additional insurance coverage a person may have, Medicare may be the primary payer or secondary payer for your claim, or may not pay at all.
When does Medicare pay first for people with employer group health plans?
- If you’re 65 or older and have retiree coverage
- If you’re 65 or older with EGHP coverage through current employment, either yours or your spouse’s, and the employer has less than 20 employees
- If you’re under 65, have a disability, and are covered by an EGHP through current employment (either yours or a family member’s), and your employer has less than 100 employees
- If you’re eligible for Medicare due to End-Stage Renal Disease (ESRD) and you have EGHP coverage, either yours or your spouse’s, and the 30-month coordination period has ended, or if you had Medicare as your primary coverage before you had ESRD
Medicare won’t pay claims
Medicare doesn’t usually pay for services when the diagnosis indicates that other insurers may provide coverage, including the following:
- Auto accidents
- Illness related to mining (Federal Black Lung Benefits Program)
- Third-party liability
- Work-related injury or illness (workers’ compensation)
When do I have to pay Medicare back for health care services?
No-fault insurance is insurance that pays for health care services resulting from personal injury or damage to someone’s property regardless of who’s at fault for causing it. Types of no-fault insurance include the following:
- Automobile insurance
- Homeowners’ insurance
- Commercial insurance plans
Medicare is the secondary payer where no-fault insurance is available. Medicare generally won’t pay for medical expenses covered by no-fault insurance. However, Medicare may pay for medical expenses if the claim is denied for reasons other than not being a proper claim. Medicare will make payment only to the extent that the services are covered under Medicare. Also, if the no-fault insurance doesn’t pay promptly (within 120 days), Medicare may make a conditional payment. A conditional payment is a payment for which Medicare has the right to seek recovery.
The money that Medicare used for the conditional payment must be repaid to Medicare when the no-fault insurance settlement is reached. If Medicare makes a conditional payment and you later resolve the insurance claim, Medicare will seek to recover the conditional payment from you. You’re responsible for making sure that Medicare gets repaid for the conditional payment.
The Medicare Modernization Act of 2003 (P.L. 108-173, Title III, Sec. 301) further clarifies language protecting Medicare’s ability to seek recovery of conditional payments.
Part D plans will pay for covered prescriptions that aren’t related to the accident or injury.
Part D Prescription Drug primary payer
Part D (Medicare prescription drug coverage) usually pays first if you have retiree coverage.
Medicare Part D pays first also for
- Working-aged individuals 65 and older (they or their covered spouse is still working) with Medicare and an employer group health plan (EGHP) with fewer than 20 employees
- A person with a disability with an EGHP with 100 or less employees
- A person with End-Stage Renal Disease with an EGHP of any size after a 30-month coordination period
- NOTE: The Federal Employee Health Benefits (FEHB) program is a type of EGHP. It covers participating current and retired federal employees. There is usually not much benefit to having Part D and FEHB coverage, unless you qualify for Extra Help. If you have both, and are retired, Part D would pay first.
- Part D (Medicare prescription drug coverage) generally pays first before Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage for people 65 and older and those who have a disability.
- Medicare Part D pays first if you have COBRA and have End-Stage Renal Disease, once you’re out of your 30-month coordination period.
Medicare and individual plans purchased through the ACA Marketplace
Generally, there is no coordination of benefits between Medicare and an Individual Marketplace Qualified Health Plan (QHP) that you purchase through the Health Insurance Marketplace. There are several important factors to consider when you’re making the decision about whether or not to remain in a QHP after you enroll in Medicare Part A.
The QHP isn’t secondary insurance, and it isn’t required to pay any costs toward your coverage if you have Medicare.
Individual Marketplace coverage isn’t employer-sponsored coverage and it’s not based on current employment. If you have individual Marketplace coverage and only enroll in Part A during your Medicare Initial Enrollment Period, you won’t be able to enroll in Part B later using a Special Enrollment Period. You will have to wait for the General Enrollment Period (January 31–March 31 each year) and you will have to pay a lifetime Part B penalty if you went without Part B for more than 12 months.
Once your Part A coverage starts, any premium tax credits and reduced cost-sharing you may have qualified for through the Marketplace will stop. That’s because Part A is considered minimum essential coverage, not Part B.
You may decide to choose Marketplace coverage instead of Medicare if you have to pay a premium for Part A. If you’re paying a premium for Part A, you can drop your Part A and Part B coverage and get a Marketplace plan instead. If you only have Part B and would have to pay a premium for Part A, you can drop Part B and get a Marketplace plan instead.
Only individuals enrolled in the Small Business Health Options Program (SHOP) program in the Marketplace will have coordination of benefits, because that coverage is based on current employment. These individuals have group health plan coverage and Medicare will pay secondary to the QHP coverage. In addition, these individuals can consider delaying Part B enrollment (without penalty) because SHOP employer-sponsored coverage is based on current employment.
Medicare Benefits Coordination & Recovery Center
Common Situations when Medicare pays first
Download the training presentation (PowerPoint), Coordination of Benefits workbook, and Common Situations Job Aid
- 2015 Coordination Of Benefits Training Presentation (0.6 MiB)
- 2015-Coordination-of-Benefits-Workbook (2.1 MiB)
- Common-Situations-When-Medicare-Pays-First (0.1 MiB)