Medicare beneficiaries do not have to rely exclusively on Medicare for their healthcare coverage. People can use other insurance plans to access more services and lower their healthcare spending.
If someone has two different forms of coverage, the primary payer covers most costs, and the secondary payer then steps in to cover some or all remaining expenses.
With Medicare, secondary payers contribute to copayments and coinsurance. Usually, Medicare is the primary payer, although sometimes it can act as the secondary payer.
This article looks at Medicare as a secondary payer and how it works with other insurers. It also discusses the benefits of having two insurers and who pays first. It then looks at how the claims process works with both primary and secondary payers.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
A person can choose to have more than one insurance plan to cover their healthcare costs. Medicare works with other insurance providers to give people comprehensive coverage.
Each insurance pays its share of the healthcare service or products that someone receives.
Medicare Secondary Payer (MSP) means another insurer pays for healthcare services first, making that insurer the primary payer.
The secondary payer covers some or all of the remaining costs that the primary payer leaves unpaid.
When someone has two insurers, they benefit from broader healthcare coverage. Each insurer could cover services that the other does not, such as dental care, eye examinations, or alternative health therapies.
As an example, a primary insurer may offer prescription drug coverage. This means a person with original Medicare would not need a separate Medicare Part D plan or a Medicare Advantage plan that includes prescription drug coverage. This could lower a person’s overall healthcare costs.
If someone needs to stay in a hospital or a nursing facility for a long time, they may find it beneficial to have two insurers. For example, an individual’s primary insurer would pay up to their limits, and Medicare Part A benefits would kick in much later, extending the coverage period.
Having two insurance plans could mean a person has two monthly premiums. For most Medicare beneficiaries, this means they have the standard Part B premium, plus the premium for the primary insurer.
Another consideration is if an individual works full time and has full coverage insurance provided by their employer, they can still carry Medicare Part A at no cost.
When considering the overall costs, a person might see their expenses increase or decrease with a secondary insurance plan. However, since a secondary payer could cover most out-of-pocket expenses, a person may find they save money despite paying two premiums.
Most people use Medicare as their primary payer. This means that Medicare receives a bill first and pays for any covered healthcare services. If Medicare does not cover the service, the bill then goes directly to the secondary payer.
If Medicare is a secondary payer, the situation is the opposite. The primary payer pays first and passes the remaining amount to Medicare.
Medicare may not pay the entire outstanding amount, and an individual may still have out-of-pocket expenses.
When someone has more than one health insurance plan, the Coordination of Benefits rule decides which one pays first.
In many cases, when someone has two healthcare plans, Medicare is the primary payer.
Medicare remains the primary payer if someone is covered by:
- a group health plan (GHP), which can be through their own or a spouse’s employment if the employer has less than 20 employees
- a retirement benefit plan
- COBRA, which is a law that protects workers’ healthcare rights
- Medicare and COBRA, and they have a disability
Medicare may be the secondary payer when a person:
- has a GHP through their own or a spouse’s employment, and the employer has more than 20 employees
- has a disability and is covered by a GHP through an employer with more than 100 employees
- has end stage renal disease, is protected by COBRA, and is within the first 30 months of Medicare eligibility
- has Medicare and has an accident involving no-fault or liability insurance
- is covered by workers’ compensation
The calculations involved depend on the coverage that the insurance provider offers and who is paying first.
For example, if someone has an invoice from a doctor for $200, the primary payer steps in first to pay the amount outlined in the following example:
| Doctors invoice | $200 |
| Primary insurer | • covers 80% of the cost • $200 minus 80% = $40 • $40 passed to the secondary insurer |
| Medicare Part B as a secondary insurer | • Medicare also covers 80% of the approved amount, minus what the primary insurance covered • 80% of $200 = $160, leaving $40 • $40 is less than $160 |
| Total out-of-pocket cost | $0 |
A healthcare professional will collect primary insurance information from a person and then usually send an invoice directly to the insurer. For this reason, healthcare professionals need to have access to an individual’s insurance details.
Claims will be submitted to the primary insurer first. Depending on the insurer’s rules, and if they do not directly bill the insurer, a person may need to complete a form online or mail in a claim form. The primary insurer then processes the claim per plan benefits.
When Medicare is a secondary payer, the primary insurer needs to report the claim status to Medicare for their consideration.
If the primary payer does not pay claims within roughly 120 days, the healthcare professional may send a bill to the secondary insurer. If this is Medicare, Medicare may make a conditional payment, which Medicare then recovers from the primary insurer.
The rules surrounding Medicare as a secondary payer depend on a person’s primary insurance company.
An individual may contact the Benefits Coordination and Recovery Center (BCRC) at 855-798-2627 (TTY: 855-797-2627, which can help answer questions.
People can choose to have additional health insurance besides Medicare.
Medicare is typically the primary payer. However, under certain circumstances, it is the secondary payer.
The rules that decide whether Medicare is the primary payer or secondary payer are complex.
Individuals with two types of health insurance may benefit from comprehensive coverage. They may find they save money even though there may be an additional premium to pay.