Medicare coverage can supplement employer-based insurance coverage for civilians, Federal employees and military veterans. Figuring out how benefit payments are coordinated can be complicated, which is why we boiled down the basics that you’ll need to know in order to still enroll in Medicare even if you have employer-based health coverage.
How is Medicare coverage coordinated with other types of benefits?
When enrolled in Medicare and another type of health insurance, both types of insurance are considered different payers and the coordination of benefits determines which insurer pays first. The primary payer first pays the limit of their coverage, and the secondary payer pays costs that were not covered by the primary payer.
For group health insurance through a current employer, this means Medicare typically pays your health care costs first, followed by your group health insurance plan. Because this may vary based on your other benefits, Medicare.gov offers a tool to help determine which provider is the primary payer and secondary payer for medical care.
In the case where your employer-provided insurance is considered the secondary player, you may be required to enroll in Medicare Part B in order for the insurance plan to pay. Medicare often makes conditional payments that cover costs your second payer is responsible for without requiring enrollees to pay for bills themselves, but conditional payments must be repaid to Medicare after receiving a settlement or other payment.
Medicare Part A and Medicare Part B offer hospital insurance and health insurance coverage, and Medicare Part D offers prescription drug coverage. These plans can include additional coinsurance, copayment, and deductible costs. To offset the additional costs, benefits gained through employers like employer-based health insurance, or private insurance plans that cover these additional costs known as Medigap plans, can supplement Medicare coverage.
How does Medicare work with retiree health benefits?
For retirees, Medicare typically pays first for your health care bills, and your group health plan pays second. Because each retiree health plan is different, it may contain different rules, limits, or costs, and may not work the same way with all Medicare coverage. Before and after retiring, it’s important to check with an employer or union to understand how retiree coverage works with Medicare.
Many retiree health care plans are similar to Medicare Supplement Insurance (Medigap), because they offer supplemental insurance coverage to help take care of missing costs that Medicare does not handle, like copayments, coinsurance, and deductibles, as well as medical care costs when traveling outside of the United States.
Medigap policies are sold through private insurance companies, require enrollment in Medicare Parts A and B, and carry their own monthly premium. Medigap and supplemental insurance plans are offered at ten different levels of coverage and vary in the amounts of coverage they offer, including the costs of deductibles, coinsurance, blood work, out-of-pocket limits, and skilled nursing facility care.
How does Medicare work with retiree health benefits for Federal employees?
Many Federal employees are eligible for premium-free Medicare Part A coverage. Premium-free coverage is available for Federal employees aged 65 and over who are receiving benefits (or are eligible to receive benefits but have not yet filed for them) from the Social Security or the Railroad Retirement Board, or if you or our spouse had Medicare-covered government employment.
Federal employees are still required to pay for Medicare Part B.
How does Medicare work with health benefits and retiree health benefits for military veterans?
Many veterans receive cost-free health care services through their VA Health Benefits. Veterans may be required to pay certain copays for non-service-related conditions; because of this, veterans may choose to enroll in private health insurance to reduce or remove copay costs.
The VA is not allowed to bill Medicare, but can bill Medicare supplemental health insurance plans for costs associated with medical care and prescriptions for non-service-related conditions.