Billing is one of the most confusing aspects of receiving health care in the United States. Not only are the doctor’s costs often opaque, but it is difficult to determine which of those costs are covered by insurance and which are your responsibility.
When you have both Medicare and private insurance, billing only grows more complicated. Fortunately, the rules regarding the coordination of benefits between Medicare and private insurers are well established. Once you understand these rules, you can better plan how your medical costs will be covered – and how much you could owe.
Who decides which group pays first?
The Medicare Coordination of Benefits [COB] program determines the circumstances in which Medicare is the “primary” or “secondary” payer. To do this, the COB program gathers information about your coverage from various sources and stores it on your Medicare record.
When does Medicare pay first?
Medicare is the primary payer in several situations. Most commonly, when you are covered by a group health insurance plan from your or your spouse’s current employer and that plan covers fewer than twenty people.
If you have group health insurance with retiree coverage from your or your spouse’s former employer, Medicare will also be the primary payer. This is the case no matter how many people your former employer’s plan covers. Similarly, Medicare is the primary payer if you are covered by COBRA insurance, regardless of the number of people covered by the plan.
When does private insurance pay first?
Medicare can also be the secondary payer for your medical needs. This occurs when you have private insurance from your or your spouse’s current employer and that plan covers twenty or more people.
If Medicare is the secondary payer in your situation, keep in mind that your private insurance company may require you to sign up for Medicare Part B prior to covering your costs. It is also important to note that Part B is subject to an Income Related Adjustment Amount [IRMAA] which increases monthly premiums for high earners. The table below summarizes the situations in which Medicare is the primary or secondary payer.
With Medicare and private insurance, which costs are your responsibility?
Your share of medical expenses can vary widely based on the type of care you receive, which parts of Medicare you have, and the specifics of your private insurance plan. In general, you are responsible for copays and deductibles plus the amount not covered by either type of insurance.
After you receive medical care, the bill is sent to the primary payer – either Medicare or private insurance – and they pay according to the terms of your coverage. Then, the remainder of the bill is sent to the secondary payer. You could owe copays or coinsurance for one or both types of coverage. Finally, if any amount remains unpaid after Medicare and your private insurance company have paid, the balance is sent to you.
Minimizing your share of medical expenses is an important aspect of retirement planning since these costs can quickly erode your supply of cash. An experienced financial advisor can review your coverage, help you choose the right Medicare supplement plan, and assist you in determining how multiple types of coverage work together to minimize your costs.
Get Answers to Your Most Pressing Medicare Questions with Meld Financial
At Meld Financial, our experienced team can help you determine whether Medicare is the primary or secondary payer in your situation. We can also analyze your Medicare coverage and how it fits into your retirement plan.
Our comprehensive wealth management plan, Financial Fingerprint™, considers the most common barriers to your retirement – such as health care costs. With this plan and a partnership with an experienced financial advisor, you can manage these obstacles and prepare financially for a successful retirement. To learn more about Financial Fingerprint™ or request your custom Medicare analysis, contact a member of our team today.
