How Medicare Affects Auto No-Fault Insurance Companies

No-fault insurance provides protection for homeowners, automobile owners and commercial businesses against bodily injury claims and damage done to property. Medicare's involvement in a no-fault insurance claim occurs when the claimant carries Medicare health insurance coverage. As Medicare benefit coverage may come into play when this happens, insurance companies must follow certain procedures settling a no-fault claim.

Medicare Secondary Payer Act

• The Medicare Secondary Payer Act originated in 1980 with the purpose of reducing government costs through the Medicare health insurance program. The act assigns Medicare as a secondary payer, meaning Medicare acts as a back-up payment provider in cases where other forms of insurance exist. Medicare's role as a federally-funded program places it under federal jurisdiction, which supersedes any state laws or conditions present within an insurance company's contracts with its policyholders. The Secondary Payer provision applies for claims involving no-fault insurance companies, private health insurers as well as any other type of insurance coverage.

Coordination of Benefits

• Whenever a person files a claim for bodily injury, no-fault insurance coverage pays the medical costs regardless of who caused the accident. When the claimant also carries Medicare health coverage, a coordination of benefit coverages comes into play. In effect, Medicare only pays towards a claim once a person's no-fault insurance company has paid and only after the benefits available through the no-fault policy have run out. In cases where a no-fault insurance company denies payment on a claim or doesn't cover a particular scenario, Medicare becomes the primary payer of all medical costs minus Medicare's standard co-pay, coinsurance and deductible requirements.

Primary Payers

• No-fault insurance companies automatically become primary payers in cases where a Medicare recipient files a medically-related claim. Technically speaking, primary payers pay service providers first while Medicare pays second. In actuality, paying first refers to role the insurance company has within the claimant's payment-recovery process. As the primary payer, a no-fault insurance company must pay up to the policy's limits before any other form of insurance coverage kicks in. In some instances, a no-fault policy may list a condition that assigns the company as a secondary payer; however, Medicare regulations override any references or conditions that appear in an insurance company's contract.

Conditional Payments

• In certain instances, a no-fault insurance company may delay making payments for a claim, leaving the policyholder to pay for medical expenses out-of-pocket. When this happens, Medicare can make a conditional payment to a service provider on behalf of the claimant. Medicare provisions allow for conditional payments in cases where a no-fault insurance company delays payment for 120 days or more. Service providers who take advantage of this provision must also withdraw their payment claims made to the liability insurer. Once a no-fault insurance company issues a settlement award, Medicare has first priority in terms of repayment.