Medicare vs. Employer Insurance: Which One Pays First
When you’re eligible for Medicare and also have employer-sponsored health insurance, things can get a little confusing. One question that comes up often: is Medicare or employer coverage primary?
The answer depends on employment status, the size of the employer, and the type of Medicare you have. Here’s what you need to know about how Medicare coordinates with employer coverage and who pays first.
Primary Payer
When you have more than one type of health coverage, the primary payer is the insurance that pays first for your healthcare services. The secondary payer may cover remaining costs, such as copayments, coinsurance, or deductibles.
Knowing which plan is primary ensures:
- Your claims are processed correctly
- You avoid unexpected bills
- You stay compliant with Medicare rules
General Rule: Employment Size Determines Priority
If You’re 65 or Older and Still Working
If your employer has 20 or more employees:
- Employer insurance is primary
- Medicare is secondary
If your employer has fewer than 20 employees:
- Medicare is primary
- Employer insurance is secondary
Note: The same rule applies if you’re covered under your spouse’s employer plan.
Watch a video on how Medicare works with employer coverage
Under 65 and Have Medicare Due to Disability:
If your (or your spouse’s) employer has 100 or more employees
- Employer insurance is primary
- Medicare is secondary
If the employer has fewer than 100 employees
- Medicare is primary
Retiree Coverage or COBRA
- Medicare is always primary
- Retiree plans and COBRA are considered secondary
In fact, if you delay enrolling in Medicare while on COBRA, you could lose COBRA coverage. Always sign up for Medicare Part B when first eligible to avoid penalties and gaps in coverage.
What About Veterans Benefits or TRICARE
If you have VA coverage, TRICARE, or other federal health benefits, the rules may differ:
- VA only covers care at VA facilities. If you go to a non-VA provider, Medicare pays first.
- TRICARE for Life acts as secondary coverage to Medicare for eligible military retirees.
Beneficiaries
- Don’t assume employer insurance will always pay first; check the size of the employer.
- Always inform Medicare and your employer plan that you have dual coverage so they can coordinate benefits properly.
- If Medicare is supposed to be primary and you haven’t enrolled in Part B, your employer plan may refuse to pay claims.
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