Medicare Insurance Primary/Secondary

A fellow caregiver asked...

Please clarify--I have gotten conflicting answers. Which insurance is primary for someone 65 years and working full-time--employer paid insurance or medicare?

Expert Answer

Medicare operates together with employer-sponsored health insurance in two different ways, depending on whether the insurance is provided through current employment or through a retirement plan. When health insurance is provided through current employment, that insurance is the primary payer, meaning it pays first (before Medicare) and to the full extent of its coverage. If you are also covered by Medicare, Medicare is the secondary payer, which means it only pays a portion of medical costs that the group insurance does not pay. For most people covered by employer-based insurance through current employment, it is worth to enroll in Medicare Part A hospital insurance, even though this is only secondary coverage, because Medicare Part A is free (no monthly premium). Medicare Part B medical insurance, which pays for doctor visits and most other outpatient charges, has a monthly premium of over $100, so for many people with good employer-based insurance, it is not worth it to pay that premium just to get secondary coverage.

Be aware, though, that if you have to pay a high monthly premium for your employer-based insurance (as many people do these days), you might want to investigate the cost of Medigap (Medicare supplement) private insurance policies or Medicare Advantage (Medicare Part C) managed care plans, plus a Medicare Part D drug plan, to replace your employer-sponsored coverage. If your monthly premium under the employer-based coverage is expensive, paying for Medicare Part B plus a Medigap insurance policy or a Medicare Advantage plan, plus Part D, might be cheaper than continuing coverage under your employer's plan. Before making any switch, however, make sure that any new coverage would be accepted by the doctors you usually use.

Once you retire and your employer-based group coverage -- if any -- comes through a retirement plan, the order of payment switches between Medicare and the group plan. Under most retirement health plans, Medicare becomes the primary payer, and in that case you will need to enroll in both Medicare Part A and Medicare Part B, as well as in a Medicare Part D drug plan, or in a Medicare Advantage plan. Your retirement group plan would then help pay for costs that Medicare does not pay, acting as a sort of Medicare supplement plan.