Understanding how Medicare works with other insurance is important for individuals who have more than one type of health coverage. This guide explains how Medicare coordinates with employer plans, retiree benefits, Medicaid, TRICARE, VA coverage, COBRA, and Marketplace plans. You’ll learn who pays first, who pays second, how to avoid coverage gaps, and how to protect your rights and your benefits.
What Is Coordination of Benefits?
When people have both Medicare and other insurance, each is called a “payer.” The order—who pays first and who pays second—is called coordination of benefits (COB). The primary payer pays up to its limit, then the secondary payer may pay the rest. If costs remain, the individual may need to pay out-of-pocket.
Knowing whether Medicare or another plan covers first depends on the type of coverage and other factors such as age, employment status, and employer size.
Group Health Plans (Active Employee Coverage)
If you or your spouse still works and you have a group health plan, here’s who pays first:
- If the employer has 20 or more employees, the group plan pays first, and Medicare is secondary.
- If the employer has fewer than 20 employees, Medicare pays first.
For workers under 65 with a disability:
- If the employer has 100+ employees, the group plan pays first.
- If fewer than 100, Medicare becomes primary.
This rule applies when you turn 65 or when you’re under 65 due to disability.
A cautionary case: a person in a small firm assumed her employer plan would remain primary—but because the firm had fewer than 20 employees, Medicare was actually primary. When she hadn’t enrolled in Part B promptly, costs were denied, and she was billed tens of thousands of dollars. That highlights the need to enroll in Medicare on time and confirm who pays first.
Retiree Insurance
If you’re covered by a retiree plan based on past employment:
- Medicare pays first, and the retiree plan pays second.
- Even if the retiree plan includes drug coverage, Medicare Part D typically pays first for covered drug expenses.
Some retiree plans participate in the Retiree Drug Subsidy (RDS) program run by CMS, which helps offset a portion of retiree drug costs that would otherwise be covered by Medicare Part D.
COBRA Continuation Coverage
COBRA lets you keep employer coverage after a job ends. Here’s how that works with Medicare:
- If you have Medicare due to turning 65 or disability (not ESRD): Medicare pays first, COBRA pays second.
- If you have Medicare due to End-Stage Renal Disease (ESRD): COBRA pays first for up to 30 months, then Medicare becomes primary afterward.
COBRA coverage is often costly because you pay the full premium, and you need to be careful about enrollment timing and what Medicare Part B status you have.
Medicaid Coverage
If you’re eligible for Medicaid in addition to Medicare:
- Medicare pays first, and Medicaid pays second.
- Medicaid covers cost-sharing, premiums, and some services not covered by Medicare—but only after Medicare pays.
Medicaid eligibility varies by state, and there are different spend-down rules or share‑of‑cost programs.
TRICARE and VA Benefits
TRICARE is the Department of Defense health program for military members, retirees, and dependents:
- If you’re on active duty and eligible for Medicare: TRICARE pays first, Medicare pays second.
- If you’re not on active duty (e.g. retired): Medicare pays first, and TRICARE may pay second (such as under TRICARE for Life).
TRICARE for Life acts as a secondary payer after Medicare, paying deductibles and coinsurance that Medicare leaves behind—but only when services are Medicare-covered and the member is enrolled in Part B.
For VA health services, generally VA-paid care is separate: Medicare pays for Medicare-covered services, VA pays for VA-authorized care, and there’s usually no overlap or coordination.
Marketplace (ACA) Plans
If you already have Medicare, you cannot buy a Marketplace plan. It’s illegal for issuers to sell one to someone who knows they have Medicare.
If you have a Marketplace plan and later become eligible for Medicare:
- You may keep the Marketplace plan, but subsidies end once Part A begins.
- Once you’re on Medicare, Medicare pays first, Marketplace plan pays secondary if coverage overlaps—and costs may increase significantly.
In most cases, enrollment in Medicare replaces the Marketplace plan.
Workers’ Compensation, No-Fault, and Liability Insurance
Other types of coverage may also pay before Medicare:
- Liability or no-fault insurance (e.g. auto accident) pays first for injury-related care; Medicare pays second for remaining health needs unrelated to the claim.
- Workers’ compensation pays first for job-related care. If Medicare makes a conditional payment, you must report the claim to BCRC so Medicare gets repaid later.
How Coordination Works: CMS and BCRC
CMS administers Coordination of Benefits through the Benefits Coordination & Recovery Center (BCRC). They collect coverage information and manage payment coordination, including cross-over claims. The process allows plans to report to Medicare who should pay first, and Medicare sends paid claim info to secondary payers when agreements are in place.
Insurers and employers must report coverage changes to Medicare, but that may take time. If your coverage changes, tell your providers and contact your insurer to ensure Medicare’s records are updated.
Enrollment Timing and Avoiding Cost Penalties
People often delay enrolling in Part B because they assume other insurance will remain primary. But delays can lead to major problems, including large medical bills or retroactive premium penalties.
Important reminders:
- If employer size makes Medicare primary, enroll in Part A and Part B when first eligible.
- If you have retiree or COBRA coverage, enrolling in Part B usually makes sense.
- Be aware of special enrollment periods if you lose employer coverage.
CMS does not automatically notify you when Medicare becomes primary—you must act proactively.
Summary Table: Who Pays First?
| Coverage Type | Who Pays First? | Secondary Payer |
|---|---|---|
| Employer health plan (≥20 employees, age 65+) | Group plan | Medicare |
| Employer health plan (<20 employees, age 65+) | Medicare | Group plan |
| Disabled (<65) with coverage (≥100 employees) | Group plan | Medicare |
| Disabled (<65) with coverage (<100 employees) | Medicare | Group plan |
| Retiree health plan | Medicare | Retiree plan |
| COBRA (non‑ESRD) | Medicare | COBRA |
| COBRA (with ESRD) | COBRA (first 30 months) | Medicare (after coordination) |
| Medicaid | Medicare | Medicaid |
| TRICARE (active duty) | TRICARE | Medicare |
| TRICARE (retired) | Medicare | TRICARE |
| VA health benefits | VA pays for VA care | Medicare pays for Medicare‑covered care |
| Marketplace plan (if later becomes Medicare‑eligible) | Medicare | Marketplace plan |
| Liability / No-fault / Workers’ comp | Other plan first | Medicare |
What You Should Do: Action Checklist
- Tell every health provider about all your coverage so claims go to the correct payer.
- Enroll in Part B promptly when Medicare may be primary.
- Inform your employer, insurer, and Medicare if your coverage changes.
- Keep records of enrollment dates, policy numbers, and premium payments.
- If bills are denied or mis‑paid, call the BCRC at 1‑855‑798‑2627 (TTY 1‑855‑797‑2627).
- If you qualify, reach out to your State Health Insurance Assistance Program (SHIP) for free help.
Common Mistakes and Risks
- Delaying Part B enrollment when Medicare is primary, resulting in unpaid claims.
- Assuming employer coverage remains primary, especially in small businesses.
- Keeping a Marketplace plan after Medicare eligibility and losing subsidy unexpectedly.
- Failing to report COBRA or retiree coverage to Medicare in time.
- Missing special enrollment windows, leading to permanent penalties.
Your Rights and Protections
Under CMS and federal law, individuals have rights to clear information about enrollment periods, how costs are shared, and their eligibility. CMS guidelines specify that insurers must report to Medicare when they pay first. If someone was misled by an employer or insurer, they may be eligible for relief or a special enrollment period.
Conclusion
Coordination of benefits is essential for people who have Medicare and other health insurance. The rules depend on employer size, retirement status, disability, ESRD, TRICARE, VA coverage, or Marketplace plans. Understanding who pays first helps you avoid higher costs, denied claims, and late penalties.
By enrolling in the right parts at the right time, reporting coverage changes, and contacting CMS, providers, or SHIP when needed, you can get the best coverage for your needs and avoid unexpected bills. Medicare coordination doesn’t have to be hard—follow this guide and use the tools available to manage your benefits with confidence.
Need help choosing the right plan? At New Mexico Medicare Plan Advisor, we can guide you through your options and find a plan that truly fits your needs. If you have questions, our friendly agents are ready to talk and help you make confident decisions about your Medicare coverage.
