What It Means When Medicare Is A Secondary Payer

Updated: Jul 17, 2022

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The goal of Medicare is to help the elderly, and those living under very specific conditions, pay for a majority of their medical bills. Sometimes, though, seniors are fortunate enough to have acquired benefits in their elderly age through companies they’ve worked for or continue to work for as they near retirement. In these cases, elderly people can have two sources of insurance: benefits through a private insurer, a spouse’s insurance, or other federal agency like the Department of Veterans Affairs (VA), and then Medicare as a secondary payer, so long as you qualify.

Medicare Financial Statements

To qualify for Medicare, you must be:

  • Over the age of 65 (and have paid Medicare taxes for at least 10 years)
  • Younger than 65 who qualify for early Social Security
  • Suffering from end-stage renal disease

You can still get Medicare if you’re insured by a private company, but there are some occasions when Medicare becomes the secondary payer for your benefits.

Being a “secondary payer” means that Medicare is second-in-line to paying your healthcare claims. The primary payer—whoever else you’re insured by on top of Medicare—will be the primary source responsible for covering your bills. They will pay up to their limits, and after that, the secondary payer will do its best to cover the remainder of the claim (if there’s anything leftover). This doesn’t mean that Medicare will cover all the remaining costs, though, and it also won’t cover the same things the primary payer covered.

When Medicare started in the mid-1960s, it was the primary payer for almost all of an elderly person’s medical claims, aside from ones covered by the VA, Workers’ Compensation, and the Federal Black Lung Program. The Centers for Medicare and Medicaid Services says that in 1980, Congress shifted some of the primary payer responsibility back to the private sector with the passing of the Omnibus Reconciliation Act in 1980—the same legislation that presented supplemental Medicare coverage, known as Medigap, as an option.

Private insurers took back the responsibility of paying for as much of the claim as the plan’s limits allowed, then Medicare took over. This process doesn’t apply for every situation where someone has an insurance plan aside from Medicare, though. So let’s discuss when Medicare is the primary payer, and when Medicare becomes the secondary payer.

Medicare plan

When Is Medicare A Primary Payer?

Knowing the difference between Medicare being a primary or secondary payer matters when you are covered by at least one other insurance plan other than Medicare. So if Medicare is the only insurer you have, they’ll be the primary payer on all of your claims, and then you will have to pay the remainder of the bill. In many cases, though, you’ll find that even if you are insured by another source, Medicare is still the primary payer.

Medicare takes on the brunt of the costs with an elderly person’s health concerns, then the GHP associated with the small employer will pay the remaining costs.

According to the CMS, these situations include when:

  • You are covered by a group health plan (GHP) through employment or a spouse’s employment, AND the employer has less than 20 employees.
  • You have a retirement benefit plan.
  • You are covered by COBRA, a 1985 law that “gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances” like job loss, death of a close family member, a reduction in work hours, or other situations—and are also covered by Medicare.
  • You are disabled and receive Medicare benefits, and are also covered by COBRA.

Many of these situations are made to protect smaller businesses that insure employees over the age of 65. Medicare takes on the brunt of the costs with an elderly person’s health concerns, then the GHP associated with the small employer will pay the remaining costs.

When Is Medicare A Secondary Payer?

In situations where Medicare is a secondary payer, it will still cover all the same things as a primary payer situation—they’ll just be second-in-line for coverage after the primary payer takes care of as much as they can. The primary payer may not cover some things that Medicare does, and vice versa, so it’s especially nice to have both sources to cover healthcare costs.

Make sure your healthcare providers know that you have more insurance than just Medicare. This will help streamline the billing process and make it so billing errors are less likely to occur. It will also eliminate confusion about whether Medicare is your primary payer or not.

Make sure your healthcare providers know that you have more insurance than just Medicare.

Situations when Medicare is a secondary payer include when:

  • You are covered by a group health plan (GHP) through employment, self-employed, or a spouse’s employment, AND the employer has more than 20 employees.
  • You are disabled and are covered by a GHP through employment or a spouse’s employment AND the employer has over 100 employees.
  • You have ESRD, are covered by COBRA on top of Medicare, and are in the first 30 months of being eligible for Medicare.
  • You have Medicare and are in an accident where no-fault or liability insurance is involved.
  • You are covered by Workers’ Compensation.

If your insurance situation changes with an employer—for example, you don’t work for them anymore or your insurance coverage changes—notify Medicare. With Medicare as a secondary payer, it’s also up to you to make sure that your Medicare bills are still paid on time, including your premiums and whatever Medicare doesn’t cover from the remainder of your bill.

What Happens When Your Primary Payer Doesn’t Pay?

Sometimes, your primary payer may not come through for you when you need it most. There could be times when they promise coverage for a certain service or treatment, but then they don’t cover it. As your primary payer, that could really hurt your pockets, even with some help from Medicare.

Thankfully, under Secondary Payer Medicare law, there is a provision called a “conditional payment” that helps cover the services for you while you push for the primary payer to cover the services. Medicare will pay the bill, then, in most conditional payment cases, you may hire an attorney to file a lawsuit, sue, or take other legal action against the primary payer in order to have them cover your services.

Medicare will make these conditional payments only if there is “evidence that the primary plan does not pay promptly” for the services they should. If you hire an attorney, make sure to notify Medicare’s Benefits Coordination & Recovery Center. That department will look into the case and identify which payments have been made conditionally. If there is any sort of settlement, award, or payout from the action taken against the primary payer, then Medicare will recoup the full cost of the conditional payment. If there is no settlement, then interest will start to accrue on the payment.

If you have any other questions regarding which insurance pays first or if your insurance changes, contact the Benefits Coordination & Recovery Center. You can call them at 855-798-2627, Monday through Friday from 8 a.m. to 8 p.m. EST (except on holidays).