No, Medicare is not always the primary payer. In several common situations, another insurer pays first and Medicare only covers what’s left over. Whether Medicare is primary or secondary depends on your age, how you qualified for Medicare, whether you or your spouse are still working, the size of the employer, and whether your care is related to an accident or injury.
When Medicare Is Primary
For most people, Medicare does pay first. If you’re 65 or older and retired, Medicare is your primary payer. Any retiree health coverage from a former employer pays second, picking up some or all of the costs Medicare doesn’t cover. The same is true if you have COBRA continuation coverage: once you’re on Medicare, whether due to age or disability, Medicare pays first and COBRA pays second.
Medicare is also primary if you’re 65 or older and still working (or covered through a spouse’s job) but the employer has fewer than 20 employees. In that case, the employer’s group health plan becomes secondary to Medicare. Similarly, if you qualify for Medicare through disability and your employer has fewer than 100 employees, Medicare pays first.
Employer Group Health Plans: The Size Rules
Employer size is the single biggest factor that can push Medicare into the secondary position. The thresholds are straightforward but different depending on why you have Medicare.
- Age 65 or older, still working or covered through a working spouse: If the employer has 20 or more employees, the employer’s group health plan pays first and Medicare pays second. This applies to self-employed individuals too, as long as the employer plan covers 20 or more workers.
- Under 65 with a disability: If you’re on Medicare due to disability and covered by a group health plan through your own job or a family member’s job, the employer plan pays first when the employer has 100 or more employees. CMS calls this a “large group health plan.”
In both cases, if at least one employer in a multi-employer group meets the size threshold, the group health plan is primary for everyone in that arrangement. The key word in all of these rules is “current employment.” The coverage must be tied to active work, not a former job. Once you retire, the employer plan shifts to secondary regardless of company size.
End-Stage Renal Disease: A 30-Month Window
If you become eligible for Medicare because of end-stage renal disease (ESRD), your existing group health plan pays first for the first 30 months of your Medicare eligibility. This is called the coordination period, and it applies regardless of how many people the employer has and regardless of whether the coverage comes through current employment.
During this window, even COBRA coverage and retiree plans pay before Medicare. This is unusual because in nearly every other situation, Medicare is primary over both COBRA and retiree coverage. It’s also worth knowing that a new 30-month coordination period starts each time you enroll in Medicare based on kidney failure. After those 30 months end, Medicare becomes the primary payer and your other coverage shifts to secondary.
One detail that catches people off guard: Medicare stays secondary during the coordination period even if the employer plan’s own policy says it pays second to Medicare. Federal law overrides that language.
Workers’ Comp, No-Fault, and Liability Insurance
Medicare is always secondary to workers’ compensation, no-fault insurance (like personal injury protection in auto policies), and liability insurance. If your medical care is related to a workplace injury, a car accident, or any situation where another party may be liable, that other coverage is responsible for paying first.
Medicare may step in and make what’s called a “conditional payment” while a claim is being resolved, essentially covering your bills so you’re not left waiting. But once the claim settles, Medicare expects to be repaid. The Benefits Coordination and Recovery Center tracks these payments and sends a final demand letter after settlement. You have 60 days from that letter to repay Medicare. Attorney fees and other costs you bore are subtracted from the repayment amount, so you’re not repaying the full settlement, just the portion Medicare covered that another insurer should have paid.
COBRA and Retiree Coverage
If you’re on Medicare and also have COBRA coverage (the temporary continuation of an employer plan after leaving a job), Medicare pays first in almost every case. COBRA becomes a supplement that may help cover deductibles, copays, or services Medicare doesn’t fully pay for. The same rule applies to retiree health plans: Medicare is primary, and the retiree plan fills in gaps.
The one exception is ESRD. During the 30-month coordination period described above, even COBRA pays before Medicare.
How the Right Payer Gets Billed
When you have more than one source of coverage, the order in which they pay matters for every claim. If the wrong insurer is billed first, claims get denied or delayed. Medicare uses information you provide, along with data from employers and insurers, to determine which payer is primary.
You’ll typically encounter questions about other coverage when you first enroll in Medicare, and periodically after that. If your situation changes, such as retiring from a job, losing employer coverage, or settling an injury claim, updating your information promptly helps avoid billing problems. Your providers also need to know the correct order so they submit claims to the right insurer first.
Quick Reference by Situation
- Retired, age 65+, with retiree plan: Medicare is primary.
- Age 65+, still working, employer has 20+ employees: Employer plan is primary.
- Age 65+, still working, employer has fewer than 20: Medicare is primary.
- Disabled, employer has 100+ employees: Employer plan is primary.
- Disabled, employer has fewer than 100: Medicare is primary.
- ESRD, first 30 months: Group health plan (or COBRA) is primary.
- ESRD, after 30 months: Medicare is primary.
- COBRA (non-ESRD): Medicare is primary.
- Workers’ comp, no-fault, or liability claim: That insurance is primary.