Which Insurance Pays First, Group Coverage or Medicare?

In addition to Medicare coverage, many seniors carry group insurance through an employer or a spouse’s employer. If you need medical services, which insurance pays first?

Basically, different health care plans are called “payers”. You will have a primary payer (the one who pays first) and a secondary payer (the one who pays second). Who pays first and who pays second depends on many things, including, how many employees an employer has, if you are retired or still working, and whether or not you are covered under a spouse’s group plan. 

Understanding how your health care coverage works is the key to keeping your out-of-pocket expenses low. Here’s how your Medicare coordinates with other insurance coverage. 

If the Employer Has 20 or More Employees, a Group Health Plan Usually Pays First

For companies with over 20 employees, group health coverage typically pays before Medicare. If you are over 65, have Medicare and enrolled in coverage through work, your group plan usually pays first. When employer benefits do no cover the entire cost of medical care, the balance is sent to Medicare. Your out-of-pocket costs will vary based on how much of the remaining balance Medicare pays. 

If the Employer Has Less Than 20 Employees, Medicare Usually Pays First

If you receive your health benefits through an employer with less than 20 employees, Medicare typically pays first. However, there are instances where your group coverage might pay first if your employer joined with other employers to form a multi-employer plan, and at least 1 employer in the group has 20 or more employees, then group coverage pays first. 

If You Receive Retiree Coverage Through a Former Employer, Medicare Usually Pays First

Generally, if you are retired and receiving retiree coverage through a former employer, Medicare pays first and group coverage pays second. However, if you are retired, your spouse is not retired and you are covered under his or her policy with 20 or more employees, group coverage pays first and Medicare pays second.

Additional Things to Consider 

Receiving care outside an employer plan’s network can be tricky. In many cases, receiving medical care outside of an employer plan’s network can cause both group coverage and Medicare not to pay. Be careful when considering out-of-network care. Check with your employer plan to ensure they will still pay. 

If you do not take your employer’s coverage, coverage through a spouse will pay before Medicare. If you choose not to take employer offered health care through your work, Medicare will pay for approved services. However, if you have coverage through a spouse, or if your spouse’s employer has over 20 employees, Medicare will not pay first. 

If you are receiving COBRA, Medicare typically pays first. Even if you had COBRA benefits before being enrolled in Medicare, Medicare Pays first. If you have Medicare and are 65 or older, and receive COBRA benefits after enrolling in Medicare, Medicare pays first. 

Even with a secondary payer, you may have out-of-pocket expenses. The primary payer (whether it’s Medicare or group coverage) doesn’t always pay the full balance owed from medical care. Unfortunately, the secondary payer may not cover all of the remaining costs. 

If you chose to delay Part B, group coverage may not pay until you join Part B. The secondary payer only pays if there are costs the primary insurer doesn’t cover. If you don’t have a primary payer because you chose to delay Part B, group insurance may not pay until you enroll in Part B (to have a primary payer).