Medicare is a government-funded health insurance program for elderly and disabled individuals. Employers that offer group health insurance plans to their employees have an interest in learning how employees’ entitlement to Medicare benefits can affect the administration of those plans.
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This article discusses the coordination of benefits between the two plans. In other words, it answers the question: How does my company health plan interact with Medicare?
1. Secondary Payer Rule
For most health plans, Medicare will take on the role of the “Secondary Payer,” while your health plan will be the “Primary Payer.” The Primary Payer pays benefits to a claimant before any other benefits are paid from any other plan.
Once the maximum coverage has been reached from the Primary Payer, then any remaining costs will be paid by the Secondary Payer. Medicare’s Secondary Payer rules dictate that Medicare coverage is generally secondary to an employer-provided plan with regard to active employees, but there are exceptions.
2. Small Businesses
If you’re a small business owner, this exception to the Secondary Payer Rule will come as welcome news. For employers with less than 20 employees, Medicare will generally act as the Primary Payer for Medicare-entitled employees.
However, if you sponsor a group health plan together with other employers or employee organizations (such as unions), and any of those other employers has more than 20 employees, this exception will not apply to you.
3. Medium Businesses
Employers that have more than 20 but less than 100 employees are also subject to an exception to the Secondary Payer Rule under certain circumstances. For Medicare-entitled participants of your plan that are under 65 or that are entitled to Medicare because of a disability, Medicare will act as the Primary Payer.
4. Retirees
If a former employee receives retiree coverage through your plan, Medicare will typically act as the Primary Payer. However, if an employee’s spouse receives coverage through your plan as a dependent, and the spouse retires but the employee continues to work, your plan will typically act as the Primary Payer for the retired spouse, and Medicare will be the Secondary Payer.
If you have less than 20 employees or you offer a multiemployer plan, Medicare will act as the Primary Payer for the retired spouse.
For more information that employers should know about Medicare benefits, as well as Social Security benefits, check out this upcoming webinar: Social Security & Medicare: Medicare Reporting Requirements & Retirement/Social Security-Eligible Employees, hosted by Callan Carter and Serena Aisenman of Trucker Huss APC, on May 29, 2018. Click here to reserve your spot today!
 Serena Aisenman, an associate and employee benefits attorney at Trucker Huss APC, assists clients in the areas of health and welfare plans, qualified retirement plans and ERISA litigation. She has experience drafting plan documents, SPDs and amendments; analyzing plan administrative and fiduciary issues; ERISA, COBRA, Affordable Care Act and HIPAA compliance; preparing submissions to the Internal Revenue Service and Department of Labor; reviewing qualified domestic relations orders (QDROs); resolving ERISA and Internal Revenue Code compliance issues raised in connection with investigations or audits by the Department of Labor or Internal Revenue Service; and addressing a variety of litigation matters. |