As more people continue working past age 65, the question of health insurance gains increasing relevance. Can you have both private insurance and Medicare? Should you? How do the two work together? Get all the information you need about private insurance and Medicare as you approach this situation for yourself.
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How do Medicare and Private Insurance Work Together?
Insurers through Medicare and your or your spouse’s private, employer-provided plan can work together to provide coverage in what is called “coordination of benefits.” Each type of coverage is a “payer,” and when there’s more than one, these rules decide which one pays first. The “primary payer” pays what it owes on your bills first, while the “secondary payer” pays what’s remaining.
- Primary payer: The insurer that pays first. This entity pays up to the limits of its coverage
- Secondary payer: The insurer that pays second. This entity will only pay if there are costs not covered by the primary payer. The secondary payer might not pay all of the uncovered costs.
Primary vs. Secondary Payers: Who Decides?
Your coverage picture looks different depending on the size of your employer:
- If your company employs fewer than 20 people, an arrangement that’s also called a small group health plan, Medicare will be the primary payer.
- If your company employs more than 20 people, in what is known as a Group Health Plan (GHP), Medicare is the secondary payer. In this case, Medicare will pay based on what your employer paid, what Medicare covers and what your doctor charged. You will have to pay any leftover costs.
If Medicare is your primary payer, it will pay first on health care claims, and your private insurance will cover any remaining, eligible expenses. In this case, you may also need to enroll in Medicare Part B before your insurance will pay. Schedule an agent call to ask a professional if you should enroll or postpone part B.
If Medicare is your secondary payer, your private insurance is your first line of coverage. Medicare then covers any remaining, eligible expenses. In this case, if your private insurance doesn’t pay the claim within 120 days, your provider could bill Medicare, which may conditionally pay the bill and then later recover these costs from your primary payer.
Should I Delay My Enrollment?
If you’ve worked for more than 10 years, you’ll most likely receive Medicare Part A premium-free. However, Part B will charge you a monthly premium. If you still have your private insurance, it likely makes sense for you to delay your Part B enrollment to avoid this monthly expense. Then, when you lose your employer or other coverage, you can use that eight-month special enrollment period to enroll in Part B without paying a penalty.
If you DON’T have private insurance but you still delay Part B enrollment, all of your medical expenses will be out of pocket, including primary care, special visits, preventative care and medical equipment. And, when you do enroll, you’ll have to pay a higher premium for as long as you have Medicare.
Schedule an agent call to ask a professional if you should enroll or postpone part B. This is a common mistake that people make when turning 65 and can cost you thousands of dollars if not selected correctly.
When Do I Need to Make the Decision?
You have a seven-month window around your 65th birthday month (3 months before, one month during, and three months after) to enroll in Medicare. You have another eight-month window to enroll when you or your spouse retire and lose private health insurance.
If you’re receiving private insurance and choose to enroll in Medicare outside of one of these windows, you may have to pay a 10 percent penalty monthly.
Any Other Considerations?
If you drop your employer plan once eligible for Medicare, know that you may not be able to get back onto your employer plan. Check with your company’s benefits administrator or schedule an agent call before making this decision. Additionally, be sure to let your doctor or provider know if you have coverage in addition to Medicare. This can help you to avoid delays and allow them to send your bills to the correct payer.
The below chart helps make sense of the various scenarios you may face, explaining which party would be the primary payer.
|Situation||Primary Payer||Secondary Payer|
|Employer (or spouse’s) insurance with >20 employees||Employer||Medicare|
|Employer (or spouse’s) insurance with <20 employees||Medicare||Employer|
|Retired from non-federal job with insurance from former employer||Medicare||Employer|
|Retired from federal job with insurance from former employer||Medicare||Federal Employees and Health Benefits Program|
|Individual/ACA||Medicare||Usually no coordination|
|Veteran with Veteran Benefits||VA pays for VA-authorized services; Medicare pays for Medicare-covered services||N/A|
|Workers’ Compensation||Workers’ comp||Medicare|
Compare Medigap Plans
If you enroll in Medicare, you may also want to consider a Medigap plan to cover gaps in coverage. We make it easy to do just that here at Compare Medigap Companies. Browse our site to compare plan types, get a free premium report for your preferred plans, or schedule an agent call for assistance.