Employer Group Insurance & Medicare
When you are eligible for both Medicare and an Employer Group Health Plan, coordination of benefits rules determine who pays first — and getting it wrong can leave you with unexpected gaps and penalties.
Coordination of Benefits
When you are eligible for both Medicare and an Employer Group Health Plan (EGHP), the "Coordination of Benefits" rules determine who is the primary payer (pays first up to its coverage limit) and who is the secondary payer (pays what's left of the covered costs). Whether a plan pays first or second depends heavily on the employer's size and the reason you qualify for Medicare.
Who Pays First?
| Medicare Eligibility Reason | Small Employer | Large Employer |
|---|---|---|
| Age 65 or Older (Working Aged) | Fewer than 20 employees: Medicare pays first · EGHP pays second | 20 or more employees: EGHP pays first · Medicare pays second |
| Disability (Under Age 65) | Fewer than 100 employees: Medicare pays first · EGHP pays second | 100 or more employees (LGHP): EGHP pays first · Medicare pays second |
| End-Stage Renal Disease (ESRD) | Any size: EGHP pays first for the first 30 months · Medicare pays first after 30 months | Any size: EGHP pays first for the first 30 months · Medicare pays first after 30 months |
Key Takeaways
Retirees
If you are retired and covered under an employer retiree plan, Medicare always pays first regardless of the employer's size — except during an ESRD 30-month coordination period. Therefore, the retiree must have Medicare Part A and Part B.
Multi-Employer Plans
If a small employer (e.g., under 20 employees) is part of a multi-employer plan where at least one employer has 20 or more employees, the plan generally counts as a large plan — meaning the EGHP pays first.
EGHP with Fewer Than 20 Employees
For a Medicare beneficiary covered by a group health plan from an employer with fewer than 20 employees, Medicare is legally designated as the primary payer and the employer group health plan acts as the secondary payer.
However, if the beneficiary only has Medicare Part A, who pays first depends entirely on where the surgical procedure takes place:
Scenario 1: Inpatient Surgery (Admitted to the Hospital)
Primary Payer: Medicare Part A pays first. Part A covers inpatient hospital stays, room and board, and surgeries performed while admitted. The beneficiary must pay the deductible — currently $1,736 — which could be covered by the EGHP depending on the plan's benefits.
Secondary Payer: The Group Health Plan pays second. It will coordinate benefits to help cover remaining out-of-pocket costs such as the Part A deductible or coinsurance, subject to the plan's specific rules.
Scenario 2: Outpatient Surgery (Ambulatory Surgical Center or Outpatient Hospital Dept.)
Primary Payer: The Group Health Plan must handle the bill.
Why? Outpatient surgeries, doctor/surgeon fees, and pre-op visits are covered under Medicare Part B. Because the beneficiary has Part A only, Medicare provides zero coverage for outpatient services.
The Catch: Depending on how the group health plan's contract is written, some small-employer plans have clauses stating they will only pay what they would have paid as a secondary insurer — meaning the EGHP deducts what Medicare Part B should have covered (80% of costs), leaving the beneficiary with a massive unpaid balance. It is critical for someone in this situation to enroll in Part B to avoid these gaps.
Questions About Your Employer Plan & Medicare?
Coordination of benefits rules are complex and the stakes are high. We can help you understand exactly how your employer plan and Medicare work together — at no cost to you.
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