Is Medicare or Employer Insurance Primary?

With the age to receive full Social Security benefits increasing, many people ages 65 and over continue to work. At age 65, you're entitled to start Medicare (as long as you've worked 40 quarters). Medicare is federally funded health insurance for the disabled and those 65 and over. If you also have health insurance through work, it can be a bit confusing as to which insurance is primary and which is secondary.

Medicare Basics

• Medicare has Parts A and B. Part A covers your hospitalization costs, though with a significant deductible of $1,000 or more. Part A doesn't have a monthly premium if you've worked the minimum quarters, so most of those still working take Part A as soon as they're eligible. Part B covers doctor's services, durable medical equipment and lab tests. There is a monthly premium for Part B, so you may want to delay taking Part B until you retire. If your coverage is continuous, there isn't a penalty for waiting to take Part B.

Employer Coverage Basics

• Employer health insurance is guaranteed if you meet your employer's requirements (like working 20 hours or more, for example). It's more affordable than an individual policy due to the risk to the health insurance company being spread over many people. It may be an HMO (Health Maintenance Organization) with a more restricted network and referral requirements, or a PPO (Preferred Provider Organization), which covers more out-of-network. You may also have the option to choose between a couple of plans.

When Medicare is Primary

• If you're over 65 and retired, even if you continue group coverage, Medicare is your primary insurance. Medicare is also primary if you're receiving coverage due to disability and have group coverage through a company with fewer than 100 employees (it can be your group coverage or a family member's), and it's primary after 30 months of Medicare eligibility due to end-stage renal disease. COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage is usually received when leaving employment; if you have COBRA and Medicare, Medicare is the primary payor. Medicare is also primary if you're currently working and your company has under 20 employees.

When Other Insurance is Primary

• If you're working for a company with 20 or more employees and entitled to Medicare, your work health insurance is primary. Employer coverage is also primary if you have Medicare due to disability and the employer has 100 or more employees. Employer coverage is also primary for the first 30 months you're qualified for Medicare due to end-stage renal disease. If you have health coverage due to a worker's compensation incident, an accident or black lung disease, those are primary. Veterans benefits and TRICARE (military health insurance) can be primary or secondary depending on the service and provider.