Knowing when Medicare is considered primary or secondary to a group health insurance plan or COBRA can be confusing, at times, for employers. There isn’t a quick and clear answer because a variety of factors must be considered. What is clear, however, is that employers may not automatically discontinue health coverage for active employees, their spouses, or dependents due to Medicare entitlement. In addition, benefits may not be reduced nor incentives offered to induce active employees to drop their current group coverage.
The Social Security Act has amended Medicare several times, making Medicare responsible to pay for only those services not paid for by other plans (Medicare Secondary Payer rules or MSP). The following table* summarizes the coordination between Medicare and group health plans:
| If Individuals | Situation | Pays First | Pays Second |
|---|---|---|---|
| Are age 65 or older and covered by group health plan because they are working or are covered because their spouses (any age) are working | Employer has less than 20 employees | Medicare | Group Health Plan |
| Are age 65 or older and covered by group health plan because they are working or are covered because their spouses (any age) are working | Employer has more than 20 employees | Group Health Plan | Medicare |
| Are on an employer retiree plan and are age 65 or older, or disabled age 65 or older | Entitled to Medicare | Medicare | Retiree Plan |
| Are disabled, covered by a large group health plan , and actively working, or covered by a family member who is working | Employer has less than 100 employees | Medicare | Group Health Plan |
| Are disabled, covered by a large group health plan , and actively working, or covered by a family member who is working | Employer has more than 100 employees | Large Group Health Plan | Medicare |
| Are age 65 or over or disabled, and covered by Medicare and COBRA | Entitled to Medicare | Medicare | COBRA |
*The table above is not all-inclusive. Other situations, including End-Stage Renal Disease, Black Lung Disease, and Worker’s Compensation, will also affect which plan is primary.
Remember that under COBRA, the maximum length of coverage can be shortened in the event a qualified COBRA beneficiary becomes entitled to Medicare. “Entitled” means the individual is at least age 65 and is actually enrolled in Medicare. This is not an absolute, however, because the law does not state that Medicare entitlement automatically ends the COBRA period—just that it can be a reason for early termination of COBRA continuation.
Some employers’ group health plans may allow qualified COBRA beneficiaries to continue to their maximum allowable period of coverage even though they become entitled to Medicare during that time. The COBRA initial notification and qualifying event notice should explain all of the reasons why an organization’s plan will terminate COBRA continuation prior to the expiration of the 18-month, 29-month, or 36-month period.
