A common question among Medicare beneficiaries is whether they can keep private health insurance while also enrolled in Medicare. In many situations the answer is yes, but the way the two plans interact depends on what kind of private coverage you carry.
Employer Health Insurance and Medicare
If you are still employed at age 65 or beyond, you may have health coverage through your job. The way Medicare and your employer plan work together depends on the size of your employer:
Large Employers (20 or More Employees)
- Your employer plan is the primary payer and pays first
- Medicare is the secondary payer and pays second
- You may be able to postpone Part B enrollment penalty-free while your employer plan is active
Small Employers (Fewer Than 20 Employees)
- Medicare is the primary payer and pays first
- Your employer plan is the secondary payer and pays second
- You should sign up for Parts A and B when you are first eligible to guarantee full coverage
Retiree Health Benefits
Some employers provide health benefits to their retired employees. If you have retiree coverage:
- Medicare pays first in nearly every situation
- Your retiree plan pays second, picking up certain costs that Medicare does not cover
- Retiree plans frequently function like Medigap policies, helping to fill gaps in Medicare coverage
It is essential to enroll in both Parts A and B when you become eligible, since your retiree plan usually requires it and may reduce your benefits if you lack Medicare.
Medigap (Medicare Supplement) Plans
Medigap policies are private insurance products built to complement Original Medicare:
- They pay for out-of-pocket expenses like deductibles, coinsurance, and copayments
- They are offered by private companies but standardized under federal guidelines
- You must be enrolled in Original Medicare (Parts A and B) to purchase a Medigap policy
- You cannot hold both a Medigap policy and a Medicare Advantage plan simultaneously
Medicare Advantage Plans
Medicare Advantage is a type of private insurance that provides your Medicare benefits through a private carrier:
- These plans take the place of Original Medicare for delivering your Part A and Part B benefits
- A Medigap policy cannot be used alongside a Medicare Advantage plan
- Employer or retiree coverage can still coordinate with Medicare Advantage, though the details vary by plan
TRICARE and Medicare
Military retirees who have TRICARE for Life can use it to supplement Medicare:
- You must be enrolled in both Parts A and B
- Medicare pays first, and TRICARE covers the remaining eligible costs
- Together, they offer thorough coverage with very little out-of-pocket expense
How Coordination of Benefits Works
When you carry more than one form of insurance, coordination of benefits rules dictate which plan pays first (primary) and which pays second (secondary):
- The primary plan pays up to its coverage limits
- The secondary plan may pick up some or all of the remaining costs
- In general, you will not owe more than you would with a single plan
Things to Keep in Mind
- Always inform both your Medicare plan and your private insurer about any other coverage you hold
- Enroll in Medicare on time to avoid jeopardizing your employer or retiree benefits
- Compare total costs, including premiums for both plans, to find the most cost-effective arrangement
- Consult a licensed insurance advisor for personalized guidance on your situation