Understanding Medicare Coordination of Benefits

There are many circumstances in which Medicare beneficiaries are enrolled in two health insurance plans at the same time. As you can imagine, there are a number of scenarios one can fall into; however, there are regulations in place to determine the coordination of benefits (COB). This specifically determines which plan pays first and then accordingly, which provider pays second. Lastly, this process will determine what costs remain for the beneficiary. If you are currently or will be enrolled in two health plans, including Medicare, it is important that you understand how enrolling in Medicare will impact your claims. This also potentially impacts which doctors you can select without incurring additional out-of-pocket costs, such as when a doctor does not accept Medicare and you have coordination of benefits that could leave you responsible for a portion of that cost.

Let’s explore how enrolling in Medicare, as an additional form of coverage, works with the health or prescription drug coverage obtained through you or your spouse’s employer or union, or the Department of Veterans Affairs.

How Having More than One Health Insurance Plan Affects Medicare Benefits

Signing up for more than one health insurance plan raises the question of who is the primary and the secondary provider. The primary payer, as the name suggests, adjudicates the claim first. After they process and pay, the claim is then forwarded to the secondary payer of claims. Under this process, the second payer will reimburse up to 100% of the balance of the billable cost of care. Any balance that remains after this process would be the responsibility of the individual. Medicare can be the primary or the secondary provider depending on certain factors and circumstances. Below we will discuss the most common scenarios.

Scenario 1 – You’re Working Past Age 65 and Delaying Retirement

Statistics show 10,000 people turn 65 and become eligible for Medicare every day; however, not everyone is ready to retire at age 65. In such a case, the size of the company you work for dictates whether or not you can delay your enrollment in Medicare.

If you or your spouse work for a company with less than 20 employees, you’re required to enroll in Medicare at age 65, because Medicare considers itself as the primary payer.

If the company employs more than 20 employees, Medicare considers your coverage as creditable, therefore allowing you to delay enrollment into Medicare A and B. Should it make sense for you to enroll in Part A, but delay enrollment into Part B, Part A would become your secondary payer to the employer insurance plan. Unless you are funding a Health Savings Account (HSA), enrollment into Part A makes sense when combining it with large group insurance because it’s premium-free and provides secondary benefits in the event of, for example, a hospital stay.

Scenario 2 – You Have Retiree Benefits

Some employers will offer their over 65 retired employees retirement medical benefits. In such a case, there are two common scenarios. First, Medicare A and B will be the primary payer of claims and the retiree plan will provide secondary payer benefits as well as prescription drug benefits. The second option includes the offering of a group Medicare Advantage plan that will provide Medicare benefits but under the guidance of a private insurance company. It is important to note that if you are enrolled in a company-sponsored retiree Medicare Advantage plan you are still responsible for paying your Part B premiums. It is important you understand how your employer plans coordinate or replace Medicare. Additionally, it is important to monitor enrollment periods and annual changes to your company retiree plans.

Scenario 3 – You’re Under Age 65 and Have a Qualifying Disability

If you have a disability that qualifies you for Medicare coverage, such as Amyotrophic Lateral Sclerosis (ALS), your Medicare enrollment will be automatic. In other instances, such as a diagnosis of End Stage Renal Disease, enrollment is determined by specific circumstances. Medicare enrollment and payer responsibilities are determined by the size of the company where you or a family member are currently receiving health benefits. Simply, If the company has fewer than 100 employees, Medicare is the primary payer; if the company employs 100 or more employers, then Medicare is the secondary payer. If under 100 employees where Medicare will be your primary payer, failure to enroll on time will result in a Late Enrollment Penalty that will last until turning age 65.

Scenario 4 – You’re Entitled to Veterans Affairs and Military Retiree Benefits

If you’re a retired service member with Veterans’ benefits, you’ll need to sign up for Medicare when you first become eligible. Veterans’ benefits only provides near-comprehensive healthcare services to eligible military veterans at Veterans’ Affairs (VA) medical centers around the country. This means your military retiree benefits might not pay for all the services received during a hospital stay, hence the need to enroll in Medicare. Dual enrollment entitles the veterans to receive care from VA and civilian doctors. In such a scenario Medicare pays for services VA doesn’t pay for if VA has authorized services in a non-VA hospital. When it comes to VA vs. Medicare, there’s no primary or secondary provider. Veterans’ Affairs pays for VA-authorized services or care, while Medicare pays for Medicare-covered services or care.

Scenario 5 – You’re an Active Service Member with a TRICARE Plan

If a military member is in active service and has TRICARE and Medicare coverage, Medicare is the primary provider. In case the military member retires, they are required to enroll for Medicare Part B to maintain the TRICARE coverage. Medicare is your primary payer anywhere in the United States, however, if you get care outside the USA, your care is billed to Tricare and you would be responsible for costs associated with this plan.

Failure to enroll on time for Medicare A and/or B on time can be costly. Whether you failed to enroll in premium-free Part A or didn’t sign up for Part B and face a lifetime penalty, it is important to know the enrollment periods and your options. If you’re unsure about Medicare eligibility, when you should enroll in Medicare or whether Medicare will function as your primary or secondary payer, consult with a local Medicare agent for assistance. Contact Medicare Portal today for one-on-one help with all your Medicare questions and needs.

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