How Medicare and Employer Coverage Coordinate

Last week we identified a type of relief that is being offered from Medicare’s Part B late-enrollment penalty for certain Medicare beneficiaries who enrolled in Medicare Part A and had coverage through the individual marketplace. As a follow-up, this week’s topic will include a discussion of how Medicare and Employer coverage are coordinated for an individual.

Medicare benefits start at age 65, but many people continue working past that age, either by choice or need. It is important to understand how Medicare and employer coverage work together.

Depending on your circumstances, Medicare is either the primary or secondary insurer. The primary insurer pays any medical bills first, up to the limits of its coverage. Thereafter, the secondary payer will cover costs that the primary insurer does not (although it may not cover all costs). Knowing whether Medicare is primary or secondary to your current coverage is crucial because it will help determine whether you need to sign up for Medicare Part B when you first become eligible. If Medicare is the primary insurer and you fail to sign up for Part B, your eventual Medicare Part B premium could start going up 10 percent for each 12-month period that you could have had Medicare Part B, but did not take it. (See last week’s blog for information on relief from this penalty).

Here are the rules governing whether Medicare coverage will be primary or secondary insurer:

1. If your employer or your spouse’s employer has 20 or more employees, your employer’s insurance will be the primary insurer and Medicare is the secondary payer. If your employer or your spouse’s employer has fewer than 20 employees, Medicare will be the primary insurer and your employer’s insurance will be the secondary insurer.

2. If you are retired and still covered by your employer’s group health insurance plan, Medicare pays first and your former employer’s plan pays second.

3. If you receive both Social Security Disability Insurance and Medicare, and your employer has 100 or more employees, your employer’s insurance pays first. Some employers are part of a multi-employer plan and if at least one employer in that plan has 20 employees or more, the employer’s insurance pays first. If your employer has fewer than 100 employees, Medicare will pay first.

4. If you have end stage renal disease (ESRD) and are in the first 30 months of Medicare coverage of ESRD, your employer’s plan pays first. After the first 30 months, Medicare then becomes the primary insurer. It does not matter how many employees your employer has.

5. If you are self-employed and have a group health plan that covers yourself and at least one other person, Medicare pays first. **Note that if you are self-employed, you may be able to deduct Medicare premiums from your income taxes by including the premiums in the self-employed health insurance deduction.

Finally, if your employer’s insurance is the primary insurer, the employer must offer you and your spouse the same coverage that it offers to younger employees. It also cannot deny you coverage, cancel your coverage once you become eligible for Medicare, or charge you more for premiums, deductibles, and copays.

For more information on how Medicare and employer insurance work together, please contact the experienced attorneys at Zacharia Brown. You may schedule an appointment by visiting our website at PittsburghElderLaw.com or by calling 724.942.6200.