Introduction
Medicare is a valuable federal health insurance program that provides coverage for millions of eligible Americans, primarily those aged 65 and older. However, there are instances when Medicare may not be the primary payer for certain medical expenses. In such cases, Medicare is a secondary payer, and understanding these scenarios is crucial for both healthcare providers and beneficiaries. This blog will delve into the concept of Medicare Secondary Payer (MSP) and explore various situations where Medicare is a secondary payer.
Understanding Medicare is a Secondary Payer (MSP)?
Medicare is a secondary payer when the Medicare program does not have primary payment responsibility i.e., when another entity has the responsibility for paying before Medicare. The MSP provisions have protected Medicare Trust Funds by ensuring that Medicare does not pay for items and services that certain health insurance or coverage is primarily responsible for paying. The MSP provisions apply to situations when Medicare is not the beneficiary’s primary health insurance coverage. Medicare statute and regulations require that all entities that bill Medicare for items or services rendered to Medicare beneficiaries must determine whether Medicare is the primary payer for those items or services. Primary payers are those that have the primary responsibility for paying a claim. Medicare remains the primary payer for beneficiaries who are not covered by other types of health insurance or coverage. Medicare is also the primary payer in certain instances, provided several conditions are met.
When Medicare Pays First?
Medicare is a secondary payer for patients who don’t have other primary insurance or coverage. In certain situations, Medicare pays first when the patient has other insurance coverage. Below we listed common situations when a patient has Medicare, other health plan coverage, and which entity pays first (primary payer) and which pays second (secondary payer).
Working aged (Medicare beneficiaries age 65 or older) and Employer Group Health Plan (GHP):
- Individual is age 65 or older, is covered by a GHP through current employment or spouse’s current employment AND the employer has less than 20 employees: Medicare pays Primary, GHP pays secondary
- Individual is age 65 or older, is covered by a GHP through current employment or spouse’s current employment AND the employer has 20 or more employees (or at least one employer is a multi-employer group that employs 20 or more individuals): GHP pays Primary, Medicare pays secondary
- Individual is age 65 or older, is self-employed and covered by a GHP through current employment or spouse’s current employment AND the employer has 20 or more employees (or at least one employer is a multi-employer group that employs 20 or more individuals): GHP pays Primary, Medicare pays secondary
Disability and Employer GHP
Individual is disabled, is covered by a GHP through his or her own current employment (or through a family member’s current employment) AND the employer has 100 or more employees (or at least one employer is a multi-employer group that employs 100 or more individuals): GHP pays Primary, Medicare pays secondary
End-Stage Renal Disease (ESRD)
Individual has ESRD, is covered by a GHP and is in the first 30 months of eligibility or entitlement to Medicare: GHP pays Primary, Medicare pays secondary during 30-month coordination period for ESRD
Individual has ESRD, is covered by a Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA plan) and is in the first 30 months of eligibility or entitlement to Medicare: COBRA pays Primary, Medicare pays secondary during 30-month coordination period for ESRD. You can also refer to the ESRD page for detailed information.
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) – the law that provides continuing coverage of group health benefits to employees and their families upon the occurrence of certain qualifying events where such coverage would otherwise be terminated.
- Individual has ESRD, is covered by COBRA and is in the first 30 months of eligibility or entitlement to Medicare: COBRA pays Primary, Medicare pays secondary during 30-month coordination period for ESRD
- Individual is age 65 years or older and covered by Medicare & COBRA: Medicare pays Primary, COBRA pays secondary
- Individual is disabled and covered by Medicare & COBRA: Medicare pays Primary, COBRA pays secondary
Retiree Health Plans
Individual is age 65 or older and has an employer retirement plan: Medicare pays Primary, Retiree coverage pays secondary
No-fault Insurance and Liability Insurance
Individual is entitled to Medicare and was in an accident or other situation where no-fault or liability insurance is involved. No-fault or Liability Insurance pays Primary for accident or other situation related health care services claimed or released, Medicare pays secondary
Workers’ Compensation Insurance
Individual is entitled to Medicare and is covered under Workers’ Compensation because of a job-related illness or injury: Workers’ Compensation pays Primary for health care items or services related to job-related illness or injury claims. Medicare generally will not pay for an injury or illness/disease covered by workers’ compensation. If all or part of a claim is denied by workers’ compensation on the grounds that it is not covered by workers’ compensation, a claim may be filed with Medicare. Medicare may pay a claim that relates to a medical service or product covered by Medicare if the claim is not covered by workers’ compensation. Prior to settling a workers’ compensation case, parties to the settlement should consider Medicare’s interest related to future medical services and whether the settlement is to include a Workers’ Compensation Medicare Set-aside Arrangement (WCMSA).Medicare is a secondary payer
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