When Is Medicare Primary?

We get lots of new Medicare beneficiaries calling to ask us how Medicare coordinates with their employer-sponsored health plan. When is Medicare primary? When is it secondary? What about if I have TRICARE for Life or workers’ compensation?

We’re going to tackle all those questions and more in today’s article.

What Does Primary Insurance Mean?

When we talk about Medicare as being the primary insurance, it means that Medicare takes the lead in covering your medical expenses, while any additional insurance plans become secondary. So, the question remains, When is the primary insurance plan?"

The order in which Medicare operates—whether as the primary or secondary payer—hinges on the kind of other health insurance you have. For example, some beneficiaries solely rely on Medicare due to the absence of any other coverage, making Medicare their primary insurer by default. On the other hand, some people may have other insurance like TRICARE for Life or VA benefits.

Now, when we have someone with employer-provided coverage, that adds another layer of complexity. The determination of whether Medicare serves as the primary or secondary insurance in the presence of active employer coverage is influenced by the size of the employer's insurance provider. We'll go deeper into this scenario soon.

Should You Enroll in Medicare?

Many people don’t realize that you don’t have to enroll in Medicare as soon as you turn 65. Many people opt to remain employed beyond age 65 and retain their access to health insurance either through their current employment or a spouse's employer. Whether or not you should start Medicare enrollment at age 65 depends largely on specific factors, including the size of the employer and the nature of the provided coverage—be it active employee benefits or retiree-specific provisions.

Next, we’re going to take a look at a few common scenarios we’ve helped our clients navigate.

Scenarios When Medicare Is Primary

Being designated as the primary insurer means that the plan takes initial responsibility for covering your medical expenses. Typically, the secondary insurance remains inactive until the primary insurer fulfills its obligations. Familiarizing yourself with circumstances where Medicare is primary insurance can be helpful in avoiding financial pitfalls.

You’re 65 or Older and Your Employer Is a Small Business

If your employer has fewer than 20 team members, Medicare will be the primary insurance carrier. After Medicare covers its portion, your group insurance steps in as the secondary payer. Given this context, it's pivotal to enroll in both components of Original Medicare as soon as you become eligible at 65. This guideline includes spouses sharing the same insurance plan.

It's worth noting that group health plans within smaller businesses can come with hefty price tags. It's not uncommon for us to see individuals shelling out upwards of $600 monthly for this coverage, with costs potentially doubling for those also covering a spouse.

If you find yourself in this situation, it's best to get comparative quotes to evaluate whether transitioning to Medicare as your primary insurer might have financial advantages. Our experience has been that such a shift can frequently result in reduced monthly premiums and deductibles for our clients.

You Have COBRA or Retiree Coverage

When you retire, there are occasions when your former employer continues to offer group health insurance, often referred to as retiree coverage. In such cases, Medicare still assumes the primary insurance role. Your retiree coverage steps in as the secondary payer.

Retiree coverage often includes prescription drug benefits, potentially obviating the need for a separate Part D plan. To be sure, request a Summary of Benefits from your previous employer detailing the benefits applicable to post-Medicare coverage.

Similarly, when it comes to COBRA, Medicare takes precedence as the primary insurer. Consequently, enrolling in both Parts A and B becomes imperative. Specifically, Part B enrollment within the initial 8-month COBRA window is crucial to avert late enrollment penalties. Failure to adhere to this timeline could subject you to a waiting period, restricting Part B enrollment until the next General Election Period.

You are on SSDI and Under Age 65 at a Medium-Sized Employer

Some people become eligible for Medicare ahead of the standard age of 65 due to qualifying disabilities. In these situations, if you keep group health insurance from an employer with fewer than 100 employees, Medicare assumes the primary insurance position.

Upon reaching the 24th month of receiving SSDI benefits, Medicare will initiate automatic enrollment for you in both Parts A and B. It’s important to inform your employer about your Medicare coverage status to ensure seamless coordination of benefits.

You Have End-Stage Renal Disease

Individuals diagnosed with End-Stage Renal Disease (ESRD) will have Medicare as their primary insurance following the 30th month of coverage. Until that point, whether you're covered by an employer's insurance, retiree insurance, or COBRA, those policies serve as your primary coverage.

It's important to recognize that Medicare eligibility stemming from ESRD might stop upon undergoing a successful kidney transplant. If that’s the case, you'd have the option to re-enroll once you hit the age of 65. Generally, Medicare coverage due to ESRD ends 36 months post-kidney transplantation unless you qualify for ongoing Medicare benefits due to age or other qualifying disabilities.

You Have TRICARE for Life

TRICARE for Life (TFL) serves as a supplementary health coverage for military retirees and their eligible spouses who also qualify for Medicare. In this context, Medicare assumes the primary insurance role for services rendered by non-military healthcare providers, which means eligible individuals need to enroll in both Medicare Parts A and B. Since TFL includes prescription drug coverage, there's typically no need to enroll in Part D. The pharmaceutical benefits provided by TFL are comprehensive, meaning that additional Part D coverage is typically redundant.

Some TFL members find Medicare Advantage plans attractive since they have benefits that TFL does not, including dental coverage. If this is something you’d like to entertain, speak with an advisor about how TFL works with Medicare Advantage plans.

You Have Medicaid

Medicaid offers financial support for healthcare costs. It’s available to individuals with limited income, the standards of which are outlined by each state. Medicaid operates as the secondary payer, stepping in only after Medicare or an employer-group health coverage has paid its share. However, it's important to realize that not all healthcare providers that accept Medicare also accept Medicaid. Before getting treatment, ask about the provider's Medicaid participation status to avoid potential out-of-pocket expenses for uncovered portions.

Individuals qualifying for Medicaid assistance may also receive support for their Medicare Part B and D premiums. If you're grappling with financial hardships and believe you meet Medicaid eligibility criteria, reach out to your state's Medicaid office.

Scenarios When Medicare Is Secondary

Secondary insurance steps in to cover costs that remain after your primary insurance has settled its share. Suppose your primary insurance has a $1000 deductible, while your secondary insurance sets a $500 deductible. In that scenario, your secondary insurance would cover the remaining $500 of the total $1000 bill.

While this example is a simple illustration, the overarching role of secondary insurance is to mitigate your out-of-pocket expenses, thereby enhancing your financial protection against healthcare costs.

Let’s take a look at when Medicare would be your secondary insurance plan.

You Work for a Large Employer

When employed by a company with 20 or more employees, Medicare typically assumes a secondary role to your employer-provided group health insurance. If the group health coverage remains financially accessible, you might decide to defer your enrollment in Medicare Part B. However, it's important to consult with a licensed insurance specialist well-versed in Medicare nuances before making your decision.

You Filed a Workers' Compensation Claim

When you have Medicare and have a work-related injury, workers' compensation takes precedence in covering any medical services necessitated by the injury.

Not Sure When Medicare Is Primary?

insurance is complex and overwhelming. We recognize this and do our best to educate and inform our clients so they can be well-prepared for Medicare when the time comes.

If you need help understanding your health insurance, reach out to us at any time. We can advise you on Medicare enrollment timelines and compare your options. Call to speak with an advisor today!