Medicare as the Secondary Payer

There is good news in 2004, if you are younger than your full retirement age and you work while getting Social Security retirement or survivors benefits.
You are able to earn more money before your benefits are reduced. You can earn up to $11,640 this year (up from $11,520 in 2003) before $1 is withheld
from your benefits for every $2 you earn. And if you reach full retirement age during 2004, $1 will be withheld for each $3 you earn over $31,080 until
your birthday month. After your birthday, you can receive your full benefit amount no matter how much you earn. To learn more about working and
collecting Social Security benefits, please go to

One of the questions that always arise in connection with Medicare coverage occurs when an individual or their spouse continues to work even though he/she is eligible for Medicare. Should you join your employer's health coverage plan or should you enroll in Medicare coverage? In this article we will explain the different rules and regulations that are involved in determining which course you should follow.

First we will list the types of benefit plans that exist that can result in Medicare being the secondary payer. They are as follows:

If you do not have any of the above types of benefit plans and you have enrolled in Medicare Part A (hospital) and Part B (doctor), Medicare is your primary payer.

In regards to Part A lets look at the situation where you or your spouse are working for a firm that has 20 or more employees and does have an Employee Group Health Plan (EGHP). If you or your spouse join the EGHP the employer's plan is the primary payer. If the firm has less than 20 employees Medicare is the primary payer, and your other insurance is the secondary payer. They will pay for whatever expenses are uncovered after Medicare pays.

In regards to Part B, Medicare's payment to the doctor as the secondary payer depends on whether the doctor takes assignment. If the doctor does not take assignment, and Medicare is the secondary payer, then Medicare will pay whichever amount is the smallest:

    1. What Medicare would pay if it were the primary payer;
    2. The actual charge minus what the other plan pays; or
    3. The higher of the Medicare allowable charge or the other plan's allowable charge, minus what the plan pays ( both charges are without regard to any coinsurance by the beneficiary)

If you have a Medigap policy Medicare is the primary payer and the Gap policy will pay for the balance thereafter. If you are covered as a veteran under the Veteran's Administration you must remember that one does not supplement the other. A private doctor is not covered under VA coverage. In making a determination as to whether or not you should go for the Medicare of the VA coverage please remember that Medicare does not cover prescription drugs, whereas you usually have some sort of prescription drug coverage through the VA.

Under both No-fault and Workmen's Compensation coverage the insurance company is the primary payer. Once the benefits are used up than Medicare will pick up the balance. Medicare may make a conditional payment, but Medicare must than be reimbursed by the insurance company.

If the employer has 100 or more employees the group is the primary payer for disability under a Long Term Group Health Plan. If there are 99 or less employees Medicare would be the primary payer for the disability.


Allan Rubin
updated June 10, 2004

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