Medicare recipients often hear the term “coordination of benefits” when they are seeking coverage or reviewing their plan during open enrollment. Coordination of benefits applies when someone on Medicare also has coverage from another health insurance company.
What is Coordination of Benefits?
If you are eligible for Medicare but also have another type of health insurance, Medicare must coordinate those benefits with the other company. Coordination of benefits determines which insurance has the primary payment responsibility and how much the other plans must contribute. Coordination of benefits also applies when you have your own healthcare coverage from your employer and your spouse has another plan with their employer.
Purpose of Coordination of Benefits
Coordination of benefits ensures that all health benefits available you are identified. It also helps coordinate the payment process and that the insurer that is considered primary pays before any other coverage. It also shares information regarding Medicare eligibility with other insurance companies and notifies them of Medicare payments so that they can issue secondary payment. This helps avoid overpayment of medical bills and insures that providers do not receive more than 100 percent in payment.
When Medicare is Primary Payer
Medicare is the primary payer if that is the only health insurance you have. Medicare is also the primary payer if your other insurance is a Medigap policy or another policy you have not purchased through your employer. If you have both Medicare and Medicaid coverage, Medicare is the primary source of payment and Medicare also pays before Indian Health Service. If you are covered under both Medicare and the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), Medicare is the primary payer. COBRA offers coverage if you lose your job and health benefits, providing you with healthcare coverage at group rates for a short period. Medicare also pays before veteran’s benefits.
When Medicare is a Secondary Payer
When Medicare is not responsible for paying a claim first, they are considered the secondary payer. When Medicare was implemented in 1966, it was only considered a secondary payer when you had coverage under workers’ compensation, Federal Black Lung benefits or had veteran’s benefits. In an effort to shift costs from Medicare to private sources of payment, Congress passed legislation in 1980 that allowed Medicare to be a secondary payer when you had certain types of private insurance. This means that if you have another form of insurance, Medicare may be the secondary payer on your insurance claims.
Veterans and Coordination of Benefits
If you are a veteran eligible for Medicare, you can access health coverage under either their VA benefits or Medicare. However, you must decide which benefit you will use each time you receive healthcare. Medicare will not be the primary payer for treatment that was authorized by the Department of Veteran’s Affairs nor will VA benefits be the primary payer for treatment authorized by Medicare. In order to obtain services under VA benefits, the service must be performed at a VA facility or have the VA authorize a non-VA facility. If you are active duty military who has TRICARE and Medicare, TRICARE pays the Medicare deductible and coinsurance amounts as well as for services not covered. Just like veterans, you are responsible for any bills both TRICARE and Medicare do not pay.
If you retired from the military and have TRICARE for Life coverage, Medicare is your primary payer in most cases. When you visit a provider that accepts Medicare, the portion covered is paid directly to the provider. Medicare then forwards the claim to TRICARE and they pay the portion they will cover directly to the provider. If the services are not covered by Medicare but are covered by TRICARE, Medicare pays nothing and you are responsible for deductibles as well as cost shares. The same is true for services covered by Medicare and not TRICARE. If neither Medicare or TRICARE covers the cost, you are responsible for the entire bill. If you receive services from a military hospital or federal provider, the costs are covered by TRICARE as Medicare does not usually pay for federally provided services.
Medicare and Medicaid
Medicaid is a program operated jointly by federal and state governments. It is designed to help pay medical costs if you have limited income and resources. If you are eligible for both Medicare and Medicaid, Medicare is the primary payer for all healthcare costs. Medicaid may pay claims for covered services after Medicare has paid their portion. If you have private health insurance as well as Medicare, your private health insurance is the primary payer. Medicaid, unless it is the only type of insurance you have, is always considered the secondary payer.
Medicare and Other Government Insurance Programs
There are other governmental programs that affect whether Medicare pays first. If you are covered under the Federal Black Lung Benefits Program, that program pays all medical costs associated with black lung disease. Medicare will not pay for doctor or hospital services for black lung treatment. If you are being treated for a condition other than black lung disease, Medicare is the first payer. If your claim is denied by the Federal Black Lung Benefits Program, you can ask your provider to send the bill, along with the denier, to Medicare. If you receive COBRA coverage and are over the age of 65, Medicare is the primary payer. However, if the costs are for coverage of End-Stage Renal Disease, Medicare becomes the primary payer.
It is not unusual for an individual to have more than one type of health coverage available to them in addition to Medicare. When this happens, the Centers for Medicare and Medicaid must coordinate benefits to ensure that providers are paid in a timely manner but are not overpaid for services they provide. For this reason, the agency uses several databases and reporting methods to determine what benefits a patient may have and the best way to coordinate those benefits.