When are Medicare secondary payers? Insurers, claims, rules, and more

Medicare beneficiaries do not have to rely exclusively on Medicare for their healthcare coverage. People can use other insurance plans to allow them access to more services and lower their healthcare spending.

If someone has two different forms of coverage, the primary payer covers most costs, and the secondary payer then steps in to cover some or all remaining expenses.

With Medicare, secondary payers contribute to copayments and coinsurance. Usually, Medicare is the primary payer, although sometimes it can act as the secondary payer.

This article looks at Medicare as a secondary payer and how it works with other insurers. It also discusses the benefits of having two insurers and who pays first. It then looks at how the claims process works with both primary and secondary payers.

We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:

  • Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
  • Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
  • Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.

A person can choose to have more than one insurance plan to cover their healthcare costs and Medicare works with other insurance providers to give people comprehensive coverage.

Each insurance pays their share of the healthcare service or products that someone receives.

Medicare secondary payer (MSP) means that another insurer pays for healthcare services first, making them the primary payer.

The secondary payer covers some or all of the remaining costs that the primary payer leaves unpaid.

When someone has two insurers, they benefit from broader healthcare coverage. Each insurer could cover services that the other does not, such as dental care, eye examinations, or alternative health therapies.

As an example, a primary insurer may offer prescription drug coverage, meaning that a person with original Medicare would not need a separate Medicare Part D plan or a Medicare Advantage plan that includes prescription drug coverage. This could lower a person’s overall healthcare costs.

If someone needs to stay in a hospital or a nursing facility for a long time, they may find it beneficial to have two insurers. For example, an individual’s primary insurer would pay up to their limits, and Medicare Part A benefits would kick in much later, extending the coverage period.

Having two insurance plans could mean a person has two monthly premiums. For most Medicare beneficiaries, this means they have the standard Part B premium, plus the premium for the primary insurer.

Careful consideration of the overall costs could mean a person’s expenses increase or decrease with a secondary insurance plan, but since a secondary payer could cover most out-of-pocket expenses, a person may find they save money despite paying two premiums.

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