Coordination of Benefits Explained
Having more than one source of healthcare coverage after you turn 65 is good. Knowing which source will pay your healthcare expenses first is better. Is it Medicare? Medicaid? Your employer’s health plan? Something else?
Fortunately, Medicare has rules in place when it comes to coordinating your benefits. Some of the rules may seem confusing, but we’ll do our best to make all of them clear.
Who’s Responsible for Paying First?
The answer depends on the type(s) of coverage you have in addition to Medicare. Sometimes Medicare will pay first and sometimes it’s a secondary payer. We’ll go through a few examples below, most of which are fairly straightforward:
Medicare and Medicaid
If you’re entitled to both Medicare and Medicaid, then Medicare is always the primary payer. Medicaid pays second after any other coverage has paid (for example, an employer group health plan).
Medicare and COBRA
If you have both Medicare and COBRA coverage, generally Medicare will pay first. If you have End-Stage Renal Disease, however, COBRA will pay first while its coverage is in effect.
Medicare and Workers’ Compensation or Accident Claims
In these situations, Medicare essentially takes a “wait and see” approach. The insurance provider or workers’ compensation benefit assumes the primary role. Often, there are no further claims to pay, but Medicare may make conditional payments if everything in the claim hasn’t been settled.
Medicare and Veterans Affairs (VA)
If you’re a veteran and receive both Medicare and either veterans’ or TRICARE benefits, the line is pretty clear: Your veterans’ coverage pays for services authorized by the Veterans Administration. TRICARE pays for services from military hospitals and other federal providers. Medicare pays first for Medicare-covered services, with TRICARE possibly as a secondary payer if you’re enrolled in it.
Medicare and Employer Group Health Plan
This situation is a little more complicated. If you’re enrolled in Medicare and either you or your spouse is still working and in the employer’s health plan, the answer depends on the size of the company:
- 20 or more employees: The employer’s health plan pays first,
- Fewer than 20 employees: Medicare pays first, then the employer plan.
If you’re disabled and have employer coverage plus Medicare, the answer also depends on the size of the company:
- 100 or more employees: The employer’s health plan pays first,
- Fewer than 100 employees: Medicare pays first, then the employer plan.
However, please don’t confuse employer coverage with retiree coverage from a former employer. If you have retiree coverage, Medicare always pays first, with your retiree coverage paying second.
Getting Coordinated in the First Place
If you’re about to turn 65, Medicare doesn’t automatically know that you have existing coverage. So, about 3 months before Medicare eligibility begins, Medicare will send a letter directing you to a website where you can fill out a questionnaire about any current coverage. Medicare uses the information you provide to set up your coverage profile and make sure your claims are paid correctly.
Keep Your Doctors Up to Date
Be sure to tell your doctors and your other healthcare providers if you become eligible for Medicare, or if there’s any change in either your employment status or coverage. This will help you avoid unnecessary delays in getting your claims processed and in keeping your benefits coordinated.