When Is Medicare the Primary if You Are an Active Employee?

Medicare is federally funded health insurance for those 65 or older and the disabled. The age to receive full Social Security benefits has increased, but Medicare's entry age has stayed the same. This, along with economic concerns and increasing life expectancy, have led to more people continuing to work after they've become eligible for Medicare. For those who are employed and have health insurance through their employer, the employer plan remains the primary coverage and Medicare becomes secondary coverage. There are occasions, though, when Medicare becomes the primary coverage.

Medicare Overview

• Medicare has Part A, which covers hospitalization, hospice and skilled nursing care, and Part B, which covers doctor care, routine physicals, screenings and medical equipment. As long as you've worked at least 40 quarters, you're eligible for Medicare Part A at age 65 without having to pay any monthly premiums. Part B does have a monthly premium, so most who have employer-sponsored health insurance, whether working or retired, do not take Medicare Part B.

When Medicare is Primary

• Medicare becomes primary coverage over employer-sponsored health coverage when your employer has fewer than 20 employees. If your employer is part of a larger organization with 20 or more employees, though, the employer health insurance is primary. Medicare is also primary if you are disabled and have group health insurance through a family member, and his or her employer has fewer than 100 employees.

When Medicare is Secondary

• Medicare is secondary to employer-sponsored coverage if your employer has 20 or more employees. It's also secondary if you're on Medicare due to a disability and have group coverage through a family member and his or her employer has 100 or more employees. If you have end-stage renal disease (kidney failure), your employer coverage is primary for the first 30 months you're eligible for Medicare. After that, Medicare is primary.

Retirement

• Once you retire, the rules change a bit. Even if you continue your employer-sponsored health insurance, Medicare becomes primary. You may want to look at other secondary insurance options such as Medigap plans or Medicare Advantage plans, to see whether the cost or coverage is better than your employer coverage. Keep in mind that if you do want to drop your employer coverage, you will need to enroll in Medicare Part B, which has a monthly premium of more than $100.