Group Health Insurance

Why is Medicare secondary for individuals with group health plan (GHP) coverage? Federal Law requires that employers offer to their employees age 65 or over the same coverage offered to employees under age 65. If the employer offers health care coverage to spouses, the same coverage must be offered regarding of age. This equal-benefit rule applies to coverage offered to full-time, part-time employees, or retirees.

Medicare beneficiaries are free to reject employer plan coverage, in which case they retain Medicare as their primary coverage. When Medicare is the primary payer, employers cannot offer such employees or their spouses a supplemental plan that pays for services covered by Medicare.

Where a GHP is the primary payer but does not pay in full for the services, Medicare becomes the secondary payer and pays for Medicare-covered service up to the Medicare approved amount. If a GHP denies payment for services because they are not covered by the plan, Medicare may pay, for services covered by Medicare.

Medicare is secondary payer to group health plans (GHPs) for the following groups of Medicare beneficiaries: working aged, certain disabled individuals, and individuals with End-Stage Renal Disease/permanent kidney failure.

Working Aged

Working aged are beneficiaries age 65 or over who have GHP coverage because of their current employment or their spouse’s current employment. For the working aged, Medicare is secondary payer for claims to the GHP. For the purposes of the MSP Working Aged provision, a GHP is any health plan that is for, or contributed to by, an employer of 20 or more employees that provides medical care, directly or through other methods, such as insurance or reimbursement, to current or former employees and their families.

The "20 or more employees" threshold is met when an employer has 20 or more full-time and/or part-time employees for each working day in each of 20 or more calendar weeks in the current calendar year or the preceding calendar year. The 20 calendar weeks do not have to be consecutive. The requirements of the MSP Law are based on the number of employees, not the number of individuals covered under the plan.

Disability

Medicare is secondary payer for claims for beneficiaries under age 65 who have Medicare because of a disability and who are covered under a large group health plan (LGHP) through their current employment or through the current employment of any family member.

A GHP that covers employees of at least one employer that had 100 or more employees on 50 percent or more of its business days during the preceding calendar year meets the definition of an LGHP. The LGHPs include plans sponsored or contributed to by an employer or employee organization (such as a union), as well as plans in which employees pay all the costs. The plan provides health care to employees, former employees, the employer, or their families, and covers at least 100 or more full-time and/or part-time employees.

End-Stage Renal Disease/Permanent Kidney Failure

For individuals who have Medicare entitlement or eligibility because of permanent kidney failure, during the first 30 months of that eligibility or entitlement, the GHP must be the primary payer. This requirement applies to both those with permanent kidney failure who have their own coverage under a GHP and to those covered under a GHP as a dependent.

The GHP is primary to Medicare during the periods described below. This rule applies without regard to the number of employees and without regard to the enrollee’s employment status. The period for which the GHP is the primary payer begins with the earlier of: