If you have both Medicare and other health insurance coverage, then each type of coverage is referred to as a “payer.” When there is more than one payer, the coordination of benefits rules will decide which one of the payers will pay benefits first when you file a claim.
Whenever a claim is filed, it is the primary payer that will pay out first. This payer will pay what it owes on the claim first, and then it will send the remainder to the secondary payer in order to pay the remainder of the balance. In some instances, there may be more than two payers.
How Primary and Secondary Insurance Payers Work
When you have more than one insurance coverage – which can include your coverage from Medicare – the insurance the pays first (the primary payer) will pay up to the limits of its coverage. The payer that pays second (the secondary payer) will only then pay if there are still costs left over that the primary insurance carrier did not cover.
The secondary payer – which could be Medicare – may not pay all of the uncovered costs. If your employer-sponsored insurance coverage is the secondary payer, you may need to enroll in Medicare Part B before your insurance will pay.
When a payer pays “first,” it essentially means that the insurer will pay the whole bill up to the limits of its coverage. Therefore, this will not always mean that the primary payer pays first in terms of time. This is because the insurance company may not pay the claim promptly.
If this is the case (i.e., if the insurer does not pay the claim within 120 days), then your doctor or other health care provider may end up also billing Medicare. In this case, Medicare may make a conditional payment in order to pay the bill. Later, Medicare may then recover any payments that the primary payer should have made.
A conditional payment is a payment that Medicare will make for services that another payer may be responsible for. Medicare will make this type of payment so that you will not be required to use your own money in paying the bill. These payments are considered to be conditional because they must be repaid to Medicare when a settlement, judgment, award, or other payment has been made to the original payer.
If Medicare makes a conditional payment for an item or a service, and you receive a settlement, judgment, award, or other type of payment for that item or service from an insurance company at a later date, then the conditional payment must be repaid to Medicare. You are responsible for ensuring that Medicare is repaid for that conditional payment.
If you do have insurance coverage from more than one source, it is important that you let your doctor and your other health care providers know about it. This will help them with sending your bills to the correct payer(s), as well as with potentially avoiding delays.