This is a common question for people over the age of 65. Due to personal and economic reasons – and the fact that the average lifespan is increasing – more people than ever are continuing to work past the age of 65. You may still be covered by your health plan, or if your spouse is working, you may have an insurance plan that covers you.
So, how does Medicare work with large group health plans and your current health insurance coverage? Who pays for your care?
In this guide, we’ll discuss everything that you need to know if you have health insurance and are also eligible for coverage with Medicare. We’ll discuss things like COB (Coordination of Benefits) and which health insurance plan will pay first if you have a large group health plan and Medicare.
Having two health insurance plans is not that uncommon. In fact, healthcare companies already have plans in place to deal with this situation. Each health insurer has policies in place to determine the Coordination of Benefits (COB). This is essential when you have two health insurance plans.
Basically, the insurance providers will work together to coordinate your benefits and use different COB policies to determine who is the “primary insurer” – the one who pays first – and the “secondary insurer” – the one who pays second. We’ll discuss how this is determined later in this guide.
The primary insurer pays first for your medical care. Then, once they have met their responsibilities for paying, your coverage “cascades” to your secondary insurer. Then, your secondary insurer will pay whatever your primary insurer didn’t cover, up to 100% of the cost of your care, as long as the healthcare service you used is covered in your insurance plan.
Then, whatever costs are left after both the primary and secondary insurers have paid for your care is your responsibility.
If you are covered by a large group health plan (usually considered to be a plan with 51-101+ employees, depending on the state), then Medicare will be your secondary insurer.
But how is it determined if Medicare is your primary insurer or your secondary insurer? Basically, it comes down to the type of group health plan you have.
Essentially, if you have a small group health insurance plan, Medicare will automatically become your primary insurer when you sign up – but for a larger plan, it will be used as your secondary insurer, and it will cover costs that are not covered by your employer.
The same basic rules apply if you are retired and you are on your spouse’s health insurance plan. If their company has fewer than 20 employees, Medicare pays first. If the company is larger than 20 employees, Medicare pays second – the business’s health plan pays first.
Generally, things are a little bit different once you retire if you are eligible for retiree insurance through a former employer. In most cases, Medicare is the primary insurer if you are on retiree insurance, even if your company has a large group health plan for retirees.
If you have any questions about who is the primary or secondary insurer – or if you just want to learn more about your workplace health insurance and ensure you understand what’s covered – we recommend contacting the insurer directly for more information.
Okay, so you understand the basics of COB – your primary insurer and your secondary insurer must work together to pay for your coverage. First, your primary insurer is billed, then your secondary insurer is billed if there are any remaining covered charges – and if this does not eliminate the bill for your medical care, you’re responsible for the remaining payments.
So how does this look in real life? Let’s take a look at a real-life example of COB, and discuss how the primary and secondary health insurance providers work with each other in more detail.
Let’s say you go to the doctor to get a biopsy of a mole. The service costs $500. For simplicity’s sake, let’s just ignore any potential deductible that you may have to pay. Your primary insurer pays the amount that it’s obligated to pay by your coverage – say, $250.
Then, the secondary insurer would coordinate with your primary insurer, and cover any costs that it’s obligated to cover – say, $150. Combined, both of your insurers have paid $400, and you’re now responsible for paying for the remaining $100 out-of-pocket if your doctor is owed more money.
Of course, that is a very simplified example, but it’s still applicable, and it’s a good example of how the basic process works. Of course, there can be some complications.
For example, what if Medicare is your secondary payer (as it would be if you had a large group health plan) and your primary insurer is not paying fast enough? If this happens, Medicare will make conditional payments to the healthcare provider if there is evidence that “the primary plan does not pay promptly.”
Then, the Benefits Coordination & Recovery Center of Medicare will recover the cost of these conditional payments in full from the insurer – which means that you won’t have to worry about late payments jeopardizing your medical care.
There is an obvious benefit to having dual multiple health insurance plans – care that may not be fully covered by your primary insurer (whether Medicare or a work health insurance plan) may be covered by your secondary plan – leading to lower out-of-pocket costs.
However, there are some downsides to having dual insurance plans. First, you will need to pay two premiums. Depending on how much you’re paying for workplace coverage and how much you’re paying for Medicare – and your expected health care costs – this may or may not be worth it, depending on your situation.
In addition, you will also have to track deductibles and other information for two health plans, and coordinate with both health insurance plans when receiving medical care. This can often pose difficulties when trying to get care – you have to make sure that care providers are “in network” for both plans to ensure that you get the maximum benefit of both insurance plans.
If you want to decide whether or not a dual health insurance plan is a good idea for you, it’s important to do the math for yourself. We recommend starting by looking at your healthcare costs, and things like:
If you have serious health problems and expect to use a lot of medical services now – and in the future – it may make sense to have two health insurance plans. But if you are relatively healthy and do not expect this to change in the near future, paying for two plans may just be overkill – and won’t save you any money.
Whether you’re covered by your own employer, or you are covered by a spouse’s insurance when you turn 65, you shouldn’t necessarily drop your existing insurance plan right away and sign up for Medicare.
This is because you will still have to pay premiums as part of a Medicare Part B plan – and depending on the available plans, your healthcare needs, and how much you’ll need to pay, this may (or may not) be a better deal than your employer coverage, or the employer coverage you get through your spouse.
In addition, you do not have to sign up for Medicare during the initial sign-up period after you turn 65. You will get a Special Enrollment Period (SEP) if you are covered by a group health plan as long as:
In addition, you get an 8-month SEP for Part A and Part B enrollment starting:
Basically, you can sign up for Medicare at any time – but if you leave your group health insurance plan, you may not be able to rejoin it later. This means you should think very carefully about your benefits and what makes more financial sense for you – before you leave your large group health plan and join Medicare.
Depending on your individual healthcare needs, it may make sense to stick with your large group health plan, drop it when you turn 65 in favor of Medicare – or even maintain coverage with both, with your large group health plan as your primary insurer, and Medicare as your secondary insurer.
The right option for you depends on your individual healthcare needs. Thanks for reading this post – and if you have questions, feel free to contact Taylor Benefits Insurance Agency now!
Todd Taylor, oversees most of the marketing and client administration for the agency with help of an incredible team.
Todd is a seasoned benefits insurance broker with over 35 years of industry experience. As the Founder and CEO of Taylor Benefits Insurance Agency, Inc., He provides strategic consultations and high-quality support to ensure his clients’ competitive position in the market.
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