Medicare works with private insurance carriers either by contracting with them to enhance or expand on existing Medicare benefits or by coordinating payment of claims for recipients who have ongoing coverage outside of Medicare.

Medicare-related Private Insurance Plans

Original Medicare, Part A and Part B, is a government-funded and administered program that was written into law in 1965. Since its creation, the Medicare program has developed numerous ways to pair its original benefits with those offered by private insurance. Through these contractual relationships, Medicare is able to provide recipients with an expanded or enhanced set of benefits in a variety of ways.

Medicare Part C and D
Medicare Advantage Plans, which may also be called MA Plans or Medicare Part C plans, are offered by private insurers as a way to bundle Original Medicare with non-Medicare benefits. This provides recipients with an opportunity to access coverage that they don’t have through Medicare, such as routine vision care or over-the-counter medication allowances. The Medicare Part B premium is paid by the Medicare Advantage plan, which charges recipients a monthly premium it determines according to its own rules.

Part D Prescription Drug Plans can be offered as part of a Part C plan which rolls the cost of its monthly premium into the monthly premium it charges, or as a standalone plan paired with Original Medicare where the monthly premium is paid separately from any Original Medicare premiums. Prescription drugs are covered under Original Medicare only if the circumstances during which they’re administered meet certain strict eligibility requirements. This typically means they’re administered during inpatient care at a hospital or must be administered by a health care professional.

Medicare Supplement Plans
Also known as Medigap, Medicare Supplement Plans expand some of the benefits covered by Original Medicare or pay some of usual cost-sharing obligations for Medicare recipients. For certain plans, Medigap adds a few new benefits, such as foreign travel coverage. The monthly premium for one of these plans is separate from the premium paid for Original Medicare. In order to make identifying Medigap plans easier, they follow a letter-name standardization in most states. Some plans may not be available in certain locations.

Coordination of Benefits with Private Insurance Plan

When a Medicare recipient had private health insurance not related to Medicare, Medicare benefits must be coordinated with that plan provider in order to establish which plan is the primary or secondary payer.

Examples of how coordination of benefits works with Medicare include:

  • Medicare recipients who have retiree insurance from a former employer or a spouse’s former employer will have their claims paid by Medicare first and their retiree insurance carrier second.
  • Medicare recipients who are 65 years of age or older and have health insurance coverage through employers with 20 or more employees will have their claims paid by their employer’s health plan first and Medicare second.
  • Medicare recipients who are under 65 years of age and disabled with health insurance coverage through employers with less than 100 employees will have their claims paid by Medicare first and by their employer’s health plan second.

Recipients who aren’t sure whether their private insurance plan or Medicare plan covers a service first or second should contact representatives of either plan to confirm which policy applies. In the even that a private insurer who is a primary payer does not pay its portion of the claim in a timely manner, Medicare may make a conditional payment for that portion of the claim. However, recipients are then responsible for ensuring this condition payment is reimbursed by their private insurer.

Related articles:

How Does Medicare Part C Work?(Opens in a new browser tab)

Does Medicare Supplement Cover Deductibles? (Opens in a new browser tab)