How Does a Secondary Payer Work with Medicare?

It’s possible for Medicare recipients to have health coverage through more than one insurance plan. When this happens, certain rules dictate which plan pays for care and in what order they pay it.

Understanding What Coordination of Benefits Means

The term “coordination of benefits” is used by Medicare and other health insurance agencies to describe the way in which they work together to pay for a recipient’s medical costs. Each health care coverage entity is a “payer,” and the order in which benefits are paid is dependent on how a recipient receives non-Medicare health coverage.

The entity that pays for its share of coverage costs first is called the primary payer, and the next is the secondary payer. While it is possible, it’s very rare to have a third payer. Medicare may be the primary payer or the secondary payer.

The policies that govern when Medicare pays as the primary payer and secondary payer can be complex, but the following guidelines below can help you learn more about how this is determined. When in doubt, your doctor’s office or local Medicare representative can help you determine if your Medicare coverage is a primary or secondary payer.

Medicare as the Primary Payer

Medicare will act as the primary payer for qualifying health care costs in the following circumstances:

• You receive Medicare and Medicaid benefits.
• You are 65 years of age or older, entitled to Medicare, but receive coverage through a group health plan provided to you or your spouse through a current employer with less than 20 employees.
• You are 65 years of age or older, entitled to Medicare, but receive retiree coverage through a group health plan provided by your former employer.
• You are disabled, entitled to Medicare, and receive coverage through a large group health plan provided to you or a family member through a current employer with less than 100 employees.
• You have End-Stage Renal Disease (ESRD) and are covered by a group health plan provided to you by a current or former employer, and it has been 30 months since you became eligible for Medicare related to ESRD.
• You have ESRD and COBRA coverage, and it has been 30 months after you became eligible for Medicare related to ESRD.

Medicare as the Secondary Payer

Medicare will act as the secondary payer for qualifying health care costs in the following circumstances:

• You are 65 years of age or older, entitled to Medicare, but receive coverage through a group health plan provided to you or your spouse through a current employer with 20 or more employees.
• You are disabled, entitled to Medicare, and receive coverage through a large group health plan provided to you or a family member through a current employer with 100 or more employees.
• You have End-Stage Renal Disease (ESRD) and are covered by a group health plan provided to you by a current or former employer, and you are within the first 30 months of Medicare eligibility related to ESRD.
• You have ESRD and COBRA coverage, and you are within the first 30 months of Medicare eligibility related to ESRD.
• You have been in an accident, are entitled to Medicare, and there is no-fault or liability insurance involved.
• You are covered by workers’ compensation due to a job-related illness or injury and are entitled to Medicare.
• You are entitled to Medicare, and you are a recipient of the Federal Black Lung Benefits Program and receive services related to black lung (special note: Medicare is the primary payer of services not related to black lung).

Special Rules for Veterans’ and TRICARE Benefits

In the case of Medicare recipients who also receive Veterans’ benefits, Medicare will pay for services and items that are usually covered by Medicare and the VA pays for VA-authorized services and items. In most cases, the VA and Medicare will not share costs for the same services or items.

For Medicare recipients covered by TRICARE, Medicare acts as the primary payer for inactive-duty military and is the secondary payer for active-duty military.