In 1980, Congress began passing provisions that made Medicare a secondary payer to certain primary plans in particular situations.
For example, Medicare is the secondary payer to coverage provided by Group Health Plans (GHPs) if a beneficiary is employed at a company with 20 or more employees, or if a beneficiary’s spouse (of any age) is enrolled in a GHP through an employer.
Employees may reject coverage through a GHP, so Medicare will become the primary payer, but employers will not be able to offer secondary coverage for services covered by Medicare.
There are exceptions, however. For example, Medicare is the secondary payer for up to 30 months for people with End-Stage Renal Disease (ESRD) who are covered by a GHP. The period begins when the employee becomes eligible for Medicare.
Medicare is also secondary insurance for people under 65 years old who are living with a disability and covered by a Large Group Health Plan (LGHP) (100 employees or more), or who have a family member covered by such a plan.
Medicare is secondary to workers’ compensation (WC) plans, liability insurance and all forms of no-fault insurance, although it will make a conditional payment if one of the aforementioned plans will not pay or will not pay promptly.
Medicare will also make conditional payments for claims denied by an employee’s GHP or LGHP, or if a beneficiary fails to file a proper claim due to mental or physical incapacity. Medicare will not make conditional payments if a claim is denied for one of the following reasons:
• GHP is alleged to be secondary to Medicare;
• GHP limits payment because a beneficiary is entitled to Medicare;
• GHP covers services for younger employees and spouses but not those over 65;
• Or the beneficiary fails to files a claim for any reason other than mental or physical incapacity.
In general, if a beneficiary has more than one primary private insurer, the costs are coordinated between the insurers. For example, if one plan is based on retirement, then Medicare is the primary payer; if the other plan is based on employment, then Medicare is the secondary payer. In this the case, the order of payment would be: GHP, Medicare, retirement plan.
What Is the Single-Payer System?
What Are Bundled Payments?
What Is the Premium Support Option, and How Is it Different From Current Medicare?