End-Stage Renal Disease (ESRD) is permanent kidney failure requiring regular dialysis or a kidney transplant. Due to the high cost and complexity of treatment, the federal government allows nearly all individuals diagnosed with ESRD to qualify for Medicare coverage, regardless of age. When a person already has health insurance, this unique eligibility creates a period of “coordination of benefits.” During this time, the two insurances must determine who pays first (the Primary Payer) and who pays second (the Secondary Payer).
Qualifying for Medicare Due to ESRD
Eligibility for Medicare based on an ESRD diagnosis requires a qualifying work history, but is not based on age. An individual qualifies if they have worked long enough under Social Security, the Railroad Retirement Board, or as a Medicare-qualified government employee. Qualification can also be met through the work history of a spouse or a dependent child’s parent.
Once work requirements are met, the start date for Medicare coverage depends on the type of treatment received. For most people receiving in-center hemodialysis, eligibility begins on the first day of the fourth month of treatment. This results in a three-month waiting period where other insurance or the individual must cover the costs.
The waiting period can be waived under specific circumstances to allow for an earlier start date. If a patient participates in a self-dialysis training program (such as home hemodialysis or peritoneal dialysis) before the fourth month of treatment, Medicare coverage can begin on the first day of the first month of dialysis. Coverage can also begin as early as the month a patient is admitted to an approved hospital for a kidney transplant, provided the procedure occurs within that month or the following two months. This initial eligibility date marks the start of the clock for the coordination period, even if the individual delays Medicare enrollment.
The Initial 30-Month Coordination Period
For individuals who qualify for Medicare due to ESRD and are also covered by an Employer Group Health Plan (EGHP), the Medicare Secondary Payer (MSP) rule mandates a 30-month period where the EGHP must remain the Primary Payer. This coordination period governs the payment order for the first two and a half years. The EGHP may be coverage from a current employer, a retiree health plan, or coverage maintained through COBRA.
Throughout the Coordination Period, the EGHP pays first for all covered medical services, including those related to the kidney condition. Medicare acts as the Secondary Payer during these 30 months, stepping in to cover costs for services not fully reimbursed by the EGHP. This secondary payment often helps cover the patient’s out-of-pocket expenses, such as deductibles, copayments, and coinsurance.
The law prohibits the EGHP from treating the ESRD patient differently during this period. The plan cannot terminate coverage, place limitations on benefits, or charge higher premiums simply because the individual has ESRD or is Medicare eligible. The 30-month clock begins on the first day the individual is eligible for Medicare due to ESRD, even if they delay enrollment.
The Shift to Medicare Primary Payer Status
Medicare becomes the Primary Payer immediately following the conclusion of the 30-month Coordination Period. This transition occurs automatically on the first day of the 31st month after the individual’s initial Medicare eligibility date. This shift establishes a change in the payment hierarchy for all Medicare-covered services.
To determine the transition date, one must first identify the month Medicare eligibility began (typically the fourth month of dialysis). For example, if a patient’s Medicare eligibility began on December 1, 2024, the 30-month Coordination Period would run through May 31, 2027. Medicare would then become the Primary Payer on June 1, 2027, the start of the 31st month.
Once this transition occurs, Medicare pays its share of the approved charges first. The EGHP, if the patient chooses to keep it, shifts to the Secondary Payer role. The EGHP is then permitted to reduce or eliminate coverage for ESRD-related services, as Medicare covers the primary share. Maintaining the EGHP as secondary coverage is often beneficial because it can help pay for the remaining 20% coinsurance for services like dialysis, which Medicare typically covers at 80%.
Managing Insurance Coverage After Medicare Becomes Primary
The shift to Medicare as the Primary Payer necessitates a review of the patient’s insurance portfolio to manage out-of-pocket costs. If the individual maintains their EGHP, it becomes a supplemental plan, paying second to cover cost-sharing expenses. This secondary coverage helps fill the gaps left by Medicare’s deductibles and coinsurance.
A patient may consider enrolling in a Medicare Advantage Plan (Part C), which combines Part A and Part B benefits into a single plan offered by private insurers. However, enrollment in many Medicare Advantage plans is often restricted for individuals with ESRD. Alternatively, patients can stick with Original Medicare (Parts A and B) and purchase a Medigap policy, which is designed to cover the cost-sharing amounts Medicare leaves behind.
If the EGHP was maintained through COBRA, the patient must be mindful of the COBRA coverage termination date (typically a maximum of 18 or 36 months, depending on the qualifying event). When COBRA ends, the patient loses secondary coverage and must ensure enrollment in a suitable Medigap or other supplemental plan to prevent increased financial responsibility. Comparing prescription drug coverage, including immunosuppressants after a transplant, is also important, as this is managed through Medicare Part D.