Pairing Medicare Coverage With Your Current Health Insurance

Takeaways

• Navigating Medicare alongside other health insurance types requires understanding which plan pays first to avoid penalties or coverage gaps.
• Retiree and COBRA coverage are almost always secondary to Medicare, making timely Medicare enrollment crucial to ensure continuous coverage and avoid high costs.

As Americans approach age 65, many find themselves navigating the complex relationship between Medicare and other forms of health insurance, such as employer-sponsored coverage, retiree health benefits, and COBRA continuation coverage. Understanding how these types of insurance interact with Medicare is necessary for avoiding late enrollment penalties, coverage gaps, or unnecessary expenses.

The Medicare Rights Center recently hosted a webinar addressing these concerns, clarifying how Medicare coordinates with different types of health insurance. The webinar offered helpful insights, including how to determine whether coverage is “primary” or “secondary” and what to expect when transitioning from employer coverage to retiree or COBRA benefits.

Medicare and Employer Health Insurance: Which Pays First?

When someone becomes eligible for Medicare at age 65, the way their employer health insurance works with Medicare depends on several factors, including their employment status and the size of their employer.

If the person’s employer has 20 or more employees, the employer group health plan is considered primary, and Medicare is secondary. In this scenario, the person can choose to delay enrolling in Medicare as long as they remain covered under the employer plan. By delaying enrollment in Medicare, the person can delay paying the additional monthly Medicare Part B premium.

If the person’s employer has fewer than 20 employees, then Medicare serves as the primary insurance and the employer’s coverage serves as the secondary coverage. Individuals in this situation should enroll in Medicare Part A and Part B when they become eligible so they can avoid coverage gaps and penalties.

The same rules generally apply to spouses covered under a working spouse’s employer plan. If the working spouse is employed by a large employer (20 or more employees), the employer insurance is primary for both. If the employer has fewer than 20 employees, Medicare is primary for the spouse, if they are over 65.

Primary and Secondary Insurance

Primary insurance is the plan that pays first on a medical claim. It covers expenses up to the limits of its coverage. Secondary insurance picks up where the primary plan leaves off, potentially covering remaining costs. Keep in mind that the secondary insurance might not pay for all the remaining costs.

Knowing which plan is the primary plan is important because if someone has both Medicare and another type of coverage but fails to enroll in the correct parts of Medicare, the other plan may provide little or no coverage. For example, if a person’s job-based insurance is secondary to Medicare, they should enroll in Medicare when they become eligible to avoid the risk of ending up with costly medical bills.

Medicare and Retiree Health Insurance

Retiree insurance is employer-sponsored health coverage offered to former employees. It often provides supplemental coverage to help pay for what Medicare doesn’t cover. Retiree coverage is almost always secondary to Medicare. To ensure full coverage, persons over 65 should enroll in Medicare even if they have retiree coverage from a former employer.

Medicare and COBRA Coverage

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows individuals to keep their employer health coverage for a limited time (typically 18 to 36 months) after being disqualified from their employer’s health insurance plan due to job loss, reduction in hours, or other life events. However, qualified individuals may be required to pay up to 102 percent of the premium to continue coverage.

If you have COBRA coverage when you become eligible for Medicare, the COBRA coverage usually ends when your Medicare coverage starts. Since COBRA is secondary to Medicare, you should enroll in Medicare as soon as you are eligible, to avoid lapses in coverage or expensive medical costs.

Resources to Better Understand Medicare

To avoid costly medical bills, speak with a Medicare counselor or contact the Medicare Rights Center, the State Health Insurance Assistance Program, or Medicare.gov.

Navigating the interaction between Medicare and other forms of health insurance can be confusing but with the right guidance you can make informed decisions that ensure continuous, cost-effective coverage.

For additional reading about Medicare, check out the following articles:

• Turning 65? What to Know About the 4 Parts of Medicare
• What You Should Know About the Medicare Tax
• Medigap: Plugging the Holes in Medicare
• Medicare and Medicaid: What to Know About DSPs
• Basics of Medicare Home Health Care Coverage