Medicare and Employer Coverage: Who Pays First?

If you have Medicare and group health coverage from your own or your spouse's current job, who pays first usually depends on the size of the employer: Medicare.gov says if the employer has 20 or more employees, the group health plan pays first and Medicare pays second; with fewer than 20 employees, Medicare pays first. If your coverage comes from a former employer (retiree coverage) or Consolidated Omnibus Budget Reconciliation Act (COBRA), Medicare generally pays first. When bills go to the wrong payer first, claims can be denied or delayed, so it's worth getting this right.

Why does "who pays first" matter?

The insurer that pays first (the primary payer) pays up to the limits of its coverage. The second (secondary) payer may pick up some of the remaining costs. If a provider sends a claim to the wrong payer first, it can be denied, and you may get a bill you don't owe.

Who pays first if I'm still working?

Medicare.gov's rules for group health plan coverage based on current employment (yours or your spouse's) at age 65 or older:

• Employer with 20 or more employees: the group health plan pays first, and Medicare pays second.
• Employer with fewer than 20 employees: Medicare pays first, and the group health plan pays second.

Different rules apply if you have Medicare because of a disability or End-Stage Renal Disease. Medicare's "Who pays first" tool walks through those situations.

What if I have retiree coverage?

Retiree coverage comes from a former employer. With retiree coverage, Medicare generally pays first. Medicare.gov suggests calling your former employer's benefits administrator or checking your plan's summary plan description to understand how it pays when you have Medicare.

Medicare's booklet on other insurance says that when you become eligible for Medicare, you may need to sign up for both Part A and Part B to get full benefits from your retiree coverage. It also says that if a group health plan or retiree coverage is the secondary payer, you may need Part B before it will pay. Some former employers offer only limited retiree coverage, so read your plan's materials closely.

What about COBRA?

Medicare.gov warns that if you have COBRA and you're eligible for Medicare, COBRA may only pay a small part of your medical costs, and you may have to pay most of the costs yourself. Contact your COBRA plan to ask what percentage it pays.

COBRA isn't coverage based on current employment. That matters for Part B. Medicare.gov says COBRA isn't considered group health plan coverage for the Part B Special Enrollment Period, and that COBRA or retiree coverage ending doesn't qualify you for one (medicare.gov/basics/get-started-with-medicare/sign-up/when-does-medicare-coverage-start). Before relying on COBRA in place of Part B, check with Social Security or a State Health Insurance Assistance Program (SHIP) counselor.

Do I need Part B if I'm still working?

It depends. If you have coverage from current work at a large employer, many people wait to sign up for Part B. Medicare.gov says you generally won't pay a Part B late penalty if you qualify for a Special Enrollment Period.

If your employer has fewer than 20 employees, Medicare pays first, so not having Part B could leave large gaps. Ask your employer's benefits office before deciding.

What about drug coverage?

Medicare's guide says your employer or union should tell you each year whether your drug coverage is "creditable," meaning it's expected to pay at least as much as Medicare's standard drug coverage. If it is, you can wait to join a Medicare drug plan without a penalty, as long as you don't go 63 days or more in a row without creditable coverage. Keep these notices.

How do I fix a bill sent to the wrong payer?

1. Call the provider's billing office. Say, "I have [employer plan] through my current job. That plan should pay first, and Medicare second." Or the reverse, if Medicare should be primary.
2. Give them both insurance cards.
3. Call the Benefits Coordination & Recovery Center at 1-855-798-2627 (TTY 1-855-797-2627) if Medicare's records about your other coverage are wrong. Medicare.gov says to call them if you have questions about who pays first or if your coverage changes.
4. Ask the provider to rebill once records are updated.

What should I tell Medicare when my coverage changes?

When you or your spouse retires, changes jobs, or your employer coverage ends, call the Benefits Coordination & Recovery Center. Updating your records helps claims go to the right place.

Frequently asked questions

Does Medicare or my employer insurance pay first?

If you're 65 or older and covered through current work at an employer with 20 or more employees, the employer plan pays first. With fewer than 20 employees, Medicare pays first.

Does Medicare pay first with retiree insurance?

Generally yes. Check with your former employer's benefits administrator.

Does Medicare pay first if I have COBRA?

Generally yes. Medicare.gov warns COBRA may pay only a small portion of costs once you're eligible for Medicare.

Who do I call to update my other insurance information?

The Benefits Coordination & Recovery Center at 1-855-798-2627 (TTY 1-855-797-2627).

Getting bills because of mixed-up coverage?

Bill Review Coach is a monthly medical bill review service for seniors and their families. Snap a photo of the bill and your insurance notices, and we'll tell you who should have paid first and what to say to the billing office. You make the calls and write the emails; we help you know what to say.