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Medicare Secondary Insurance vs. Supplemental Policy

Medicare Secondary Insurance is the definition used by the Centers for Medicare and Medicaid Services (CMS) when Medicare is not the primary payer, meaning Medicare is not responsible for the primary payment. Medicare Secondary Insurance is sometimes confused with Medicare Supplemental Insurance, which provides payments for "gaps" in coverage when Medicare is the primary payer.

  1. Medicare Secondary Insurance

    • Federal law provides for certain categories of beneficiaries. Medicare serves as the secondary payer regardless of any state law to the contrary. Primary plan is defined as "a group health plan, large group health plan, a workman's compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan), or no-fault insurance.

    Beneficiaries

    • When a beneficiary experiences a change in employment status, including retirement and health insurance companies, this may impact Medicare claims payments. When a beneficiary receives health care services, they should inform medical providers of possible changes in health insurance due to changes in employment status or other coverage changes.

    Health Care Providers

    • CMS recommends that Medicare Part A providers and Medicare Part B providers obtain billing information before providing hospital services and provide the intermediary with MSP information, including condition and occurrences codes on the claim.

    Employers

    • Employers must be certain their insurance plan identifies individuals to whom the MSP requirement applies; be certain employer's insurance plan provides for primary payment when Medicare is the secondary payer.

    Medicare Supplemental Insurance

    • Medicare Supplemental Insurance (or Medigap) usually covers expenses that may not be paid for by Medicare because of deductible or coinsurance amounts or additional limits. When a beneficiary purchases a Medigap policy, they must have Medicare Part A and Medicare Part B.

    Policies and Costs

    • Insurance companies can only sell a basic Medigap insurance policy. Medigap insurance policies are required to follow state and federal laws. A Medigap insurance policy must be clearly identified as a Medicare supplemental policy. When selecting a Medigap insurance policy, it is important to compare policies because costs can vary. An employer is prohibited from subsidizing or arranging a Medicare supplement policy where the law makes Medicare the secondary payer, even if the employer does not pay the premium but merely collects and forwards to the insurance company.

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