How does Medicare work with other insurance?

It is very common for someone to have Medicare and another type of health insurance coverage. When you have more than one payer then, “coordination of benefits” rules will decide which one will be responsible to pay first. All remaining bills will be sent to the “secondary payer” to pay. Note: In some case there may also be a third payer.

What does it mean to pay primary/secondary?

  • The insurance that pays first (primary payer) pays up to the limits of its coverage.
  • The one that pays second (secondary payer) only pays if there are costs the primary insurer didn’t cover.
  • The secondary payer (which may be Medicare) may not pay all the uncovered costs.
  • If your employer insurance is the secondary payer, you may need to enroll in Medicare Part B before your insurance will pay.
  • Paying “first” means paying the whole bill up to the limits of the coverage. It doesn’t always mean the primary payer pays first in time. If the insurance company doesn’t pay the claim promptly (usually within 120 days), your doctor or other provider may bill Medicare. Medicare may make a conditional payment to pay the bill, and then later recover any payments the primary payer should’ve made.

Want to find out which insurance pays first?

If you have questions about who pays first, or if your insurance changes, call the Benefits Coordination & Recovery Center (BCRC) at 1-855-798-2627. TTY users should call 1-855-797-2627.

What is Retiree insurance?

If you’re retired and have Medicare and group health plan (retiree) coverage from a former employer, generally, Medicare pays first for your health care bills and your group health plan coverage pays second.
 
How your retiree group health plan coverage works depends on the terms of your specific plan. Your employer or union, or your spouse’s employer or union, might not offer any health coverage after you retire. If you can get group health plan coverage after you retire, it might have different rules, and might not work the same way with Medicare.

5 things to know about retiree coverage

  1. Find out if you can continue your employer coverage after you retire. Generally, when you have retiree coverage from an employer or union, they control this coverage. Employers aren’t required to provide retiree coverage, and they can change benefits or premiums, or even cancel coverage.
  2. Find out the price and benefits of the retiree coverage, including whether it includes coverage for your spouse. Your employer or union may offer retiree coverage for you and/or your spouse that limits how much it will pay. It might only provide “stop loss” coverage, which starts paying your out-of-pocket costs only when they reach a maximum amount.
  3. Find out what happens to your retiree coverage when you’re eligible for Medicare. For example, retiree coverage might not pay your medical costs during any period in which you were eligible for Medicare but didn’t sign up for it. When you become eligible for Medicare, you may need to enroll in both Medicare Part A and Part B to get full benefits from your retiree coverage.
  4. Find out what effect your continued coverage as a retiree will have on both your health coverage and your spouse’s health coverage. If you’re not sure how your retiree coverage works with Medicare, get a copy of your plan’s benefit booklet, or look at the summary plan description provided by your employer or union. You can also call your employer’s benefits administrator and ask how the plan pays when you have Medicare. You may want to talk to your State Health Insurance Assistance Program (SHIP) for advice about whether to buy a Medicare Supplement Insurance (Medigap) policy.
  5. If your former employer goes bankrupt or out of business, Federal COBRA rules may protect you if any other company within the same corporate organization still offers a group health plan to its employees. That plan is required to offer you COBRA continuation coverage. If you can’t get COBRA continuation coverage, you may have the right to buy a Medigap policy even if you’re no longer in your Medigap open enrollment period.
    Since Medicare pays first after you retire, your retiree coverage is likely to be similar to coverage under Medicare Supplement Insurance (Medigap). Retiree coverage isn’t the same thing as a Medigap policy but, like a Medigap policy, it usually offers benefits that fill in some of Medicare’s gaps in coverage—such as coinsurance and deductibles. Sometimes retiree coverage includes extra benefits, like coverage for extra days in the hospital.

What is Medicare Supplement Insurance (Medigap)?

A Medicare Supplement Insurance (Medigap) policy, sold by private companies, can help pay some of the health care costs that Original Medicare doesn’t cover, like copayments, coinsurance, and deductibles.
 
Some Medigap policies also offer coverage for services that Original Medicare doesn’t cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then your Medigap policy pays its share.

A Medigap policy is different from a Medicare Advantage Plan. Those plans are ways to get Medicare benefits, while a Medigap policy only supplements your Original Medicare benefits.

8 things to know about Medigap policies

  1. You must have Medicare Part A and Part B.
  2. If you have a Medicare Advantage Plan, you can apply for a Medigap policy, but make sure you can leave the Medicare Advantage Plan before your Medigap policy begins.
  3. You pay the private insurance company a monthly premium for your Medigap policy in addition to the monthly Part B premium that you pay to Medicare.
  4. A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you’ll each have to buy separate policies.
  5. You can buy a Medigap policy from any insurance company that’s licensed in your state to sell one.
  6. Any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can’t cancel your Medigap policy as long as you pay the premium.
  7. Some Medigap policies sold in the past cover prescription drugs, but Medigap policies sold after January 1, 2006 aren’t allowed to include prescription drug coverage. If you want prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D).
  8. It’s illegal for anyone to sell you a Medigap policy if you have a Medicare Medical Savings Account (MSA) Plan

What does a Medicare Supplement not cover?

Medicare Supplement policies generally don’t cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.

What are some types of Insurance plans that are not Medicare Supplements (Medigap)?

Some types of insurance aren’t Medigap plans, they include:

  • Medicare Advantage Plans (like an HMO, PPO, or Private Fee-for-Service Plan)
  • Medicare Prescription Drug Plans
  • Medicaid
  • Employer or union plans, including the Federal Employees Health Benefits Program (FEHBP)
  • TRICARE
  • Veterans’ benefits
  • Long-term care insurance policies
  • Indian Health Service, Tribal, and Urban Indian Health plans

What happens if you drop your Medicare Supplement (Not just the drug coverage)?

If you decide to drop your entire Medicare Supplement policy, you need to be careful about the timing. For example, you may want a completely different Medigap policy (not just your old Medigap policy without the prescription drug coverage), or you might decide to switch to a Medicare Advantage Plan that offers prescription drug coverage.

If you drop your entire Medigap policy and the drug coverage wasn’t creditable prescription drug coverage or you go 63 days or more in a row before your new Medicare drug coverage begins, you have to pay a late enrollment penalty when you join a new Medicare drug plan.

Medigap costs?

Medicare doesn’t pay any of the costs for you to get a Medigap policy. You have to pay the premiums for a Medigap policy.
 
In most Medigap policies, when you sign the Medigap insurance contract you agree to have the Medigap insurance company get your Part B claim information directly from Medicare, and then they pay the doctor directly. Some Medigap insurance companies also provide this service for Part A claims.

If your Medigap insurance company doesn’t provide this service, ask your doctors if they “participate” in Medicare. This means that they “accept assignment” for all Medicare patients. If your doctor participates, the Medigap insurance company is required to pay the doctor directly if you request.

Comparing the costs of Medigap Plans?

Insurance companies may charge different premiums for the same exact policy. As you shop for a policy, be sure you’re comparing the same policy (for example, compare Plan A from one company with Plan A from another company).

In some states, you may be able to buy another type of Medigap policy called Medicare SELECT. If you buy a Medigap SELECT policy, you have rights to change your mind within 12 months and switch to a standard Medigap policy.

The Differences between Medigap and Medicare Advantage?

  • Medigap policies can’t work with Medicare Advantage Plans. If you have a Medigap policy and join a Medicare Advantage Plan (Part C), you may want to drop your Medigap policy. Your Medigap policy can’t be used to pay your Medicare Advantage Plan copayments, deductibles, and premiums.
  • If you want to cancel your Medigap policy, contact your insurance company. If you leave the Medicare Advantage Plan, you might not be able to get the same Medigap policy back, or in some cases, any Medigap policy unless you have a “trial right.”
  • If you have a Medicare Advantage Plan, it’s illegal for anyone to sell you a Medigap policy unless you’re switching back to Original Medicare. Contact your State Insurance Department if this happens to you.
  • If you want to switch to Original Medicare and buy a Medigap policy, contact your Medicare Advantage Plan to see if you’re able to disenroll.
  • If you join a Medicare Advantage Plan for the first time, and you aren’t happy with the plan, you’ll have special rights to buy a Medigap policy if you return to Original Medicare within 12 months of joining.
  • If you had a Medigap policy before you joined, you may be able to get the same policy back if the company still sells it. If it isn’t available, you can buy another Medigap policy.
  • The Medigap policy can no longer have prescription drug coverage even if you had it before, but you may be able to join a Medicare Prescription Drug Plan (Part D).
  • If you joined a Medicare Advantage Plan when you were first eligible for Medicare, you can choose from any Medigap policy.

Medigap & Medicare drug coverage (Part D)

Can you join a Medicare Prescription Drug Plan and have a Medigap policy with drug coverage?

If you have a Medigap policy with prescription drug coverage, this means you chose not to join a Medicare drug plan.
 
If your Medigap policy covers prescription drugs, you must tell your Medigap insurance company if you join a Medicare Prescription Drug Plan so it can remove the prescription drug coverage from your Medigap policy and adjust your premium. Once the drug coverage is removed, you can’t get that coverage back even though you didn’t change Medigap policies.
 
Your Medigap carrier must send you a notice each year telling you if the prescription drug coverage in your Medigap policy is creditable. You should keep these notices in case you decide later to join a Medicare drug plan.

What if you have a Medigap policy with creditable drug coverage?

If you have a Medigap policy that includes creditable prescription drug coverage, you can only join a Medicare drug plan between October 15–December 7, unless you lose your Medigap policy (for example, if it isn’t guaranteed renewable, and your company cancels it). In that case, you can join a Medicare Prescription Drug Plan at the time you lose your Medigap policy.

What if you have a Medigap policy without creditable drug coverage?

If you don’t have creditable prescription drug coverage and you decide to join a Medicare Prescription Drug Plan later, you’ll probably have to pay a late enrollment penalty. This means you’ll pay a higher monthly premium than if you joined when you were first eligible.
 
Your penalty amount increases for each month that you wait to join a Medicare drug plan, and, in general, you’ll have to pay this penalty for as long as you have a Medicare drug plan.

When can I buy Medigap?

Buy a policy when you are first eligible!

The best time to buy a Medigap policy is during your 6-month Medigap open enrollment period, because you can buy any Medigap policy sold in your state, even if you have health problems. This period automatically starts the month you’re 65 and enrolled in Medicare Part B (Medical Insurance). After this enrollment period, you may not be able to buy a Medigap policy. If you’re able to buy one, it may cost more.
 
During open enrollment?
Medigap insurance companies are generally allowed to use medical underwriting to decide whether to accept your application and how much to charge you for the Medigap policy. However, if you apply during your Medigap open enrollment period, you can buy any Medigap policy the company sells, even if you have health problems, for the same price as people with good health.
 
Outside open enrollment?
If you apply for Medigap coverage after your open enrollment period, there’s no guarantee that an insurance company will sell you a Medigap policy if you don’t meet the medical underwriting requirements, unless you’re eligible due to one of the situations below.
 
In some states, you may be able to buy another type of Medigap policy called Medicare SELECT. If you buy a Medigap SELECT policy, you have rights to change your mind within 12 months and switch to a standard Medigap policy.

Tips for buying your Medigap Policy?

Fill out the application carefully and completely, including medical questions. The answers you give will determine your eligibility for open enrollment or guaranteed issue rights (also called “Medigap protections”).
 
If your insurance agent fills out the application, check to make sure it’s correct.
 
Remember that the insurance company can’t ask you any questions about your family history or require you to take a genetic test.
 
If you buy a Medigap policy during your Medigap open enrollment period, the insurance company can’t use any medical answers you give to deny you a Medigap policy or change the price.
 
If you provide evidence that you’re entitled to a guaranteed issue right, the insurance company can’t use any medical answers you give to deny you a Medigap policy or change the price.

How to pay for your policy?

It’s best to pay by check, money order, or bank draft. Make it payable to the insurance company, not the agent. If buying from an agent, get a receipt with the insurance company’s name, address, and phone number for your records. Some companies may offer electronic funds transfer.

When to decide to start your policy?

Ask for your policy to become effective when you want coverage to start. Generally, Medigap policies begin the first of the month after you apply. If, for any reason, the insurance company won’t give you the effective date for the month you want, call your State Insurance Department.

You paid for your policy, but it hasn’t started?

If it’s been 30 days and you didn’t get your Medigap policy, call your insurance company.
 
If it’s been 60 days and you didn’t get your Medigap policy, call your State Insurance Department.

4 reasons you may want to switch Medigap policies?

  1. You’re paying for benefits you don’t need.
  2. You need more benefits than you needed before.
  3. Your current Medigap policy has the right benefits, but you want to change your insurance company.
  4. Your current Medigap policy has the right benefits, but you want to find a policy that’s less expensive.

Can I switch policies?

In most cases, you won’t have a right under Federal law to switch Medigap policies, unless you’re eligible under a specific circumstance or guaranteed issue rights, or you’re within your 6-month Medigap open enrollment period. You don’t have to wait a certain length of time after buying your first Medigap policy before you can switch to a different Medigap policy.
 
You may still have to wait up to 6 months before that benefit will be covered, regardless of how long you have had your current Medigap policy.

How to switch Medigap policies?

If you decide to change insurance companies, call the new insurance company and arrange to apply for your new Medigap policy. If your application is accepted, call your current insurance company, and ask for your coverage to end. The insurance company can tell you how to submit a request to end your coverage.

Medigap free-look period

You have 30 days to decide if you want to keep the new Medigap policy. This is called your “free look period.” The 30-day free look period starts when you get your new Medigap policy. You’ll need to pay both premiums for one month.
 
Don’t cancel your first Medigap policy until you’ve decided to keep the second Medigap policy. On the application for the new Medigap policy, you’ll have to promise that you’ll cancel your first policy.