Groups 20 or More

Group health plans must determine whether the plan or Medicare is the primary payer (pays a health claim first) for Medicare eligible individuals.  The term “Coordination of Benefits (“COB”)” is used when assigning responsibility for first and second payment.  The Medicare Secondary Payer Rules (“MSP Rules”) are used between Medicare and group health plans.

CMS has stated that if a same-sex couple is validly married under the laws of a State that recognizes same-sex marriage, they will be regarded as married for all purposes under Medicare. The expanded rules for the definition of “spouse”, including proper reporting to CMS as described below, must be implemented with a start date for the coverage in question no later than January 1, 2015.

MSP – Working Aged

The working aged MSP Rules apply only to group health plans of employers with 20 or more employees for each working day in at least 20 weeks of the current or preceding calendar year. In determining whether this threshold has been met, the employer must count full and part-time employees, leased employees and employees of employers in an “affiliated service group” or considered a “single employer” for purposes of the Internal Revenue Code.

Multi-employer Plans (e.g., a union plan) and multiple employer group health plans (e.g., an association-based MEWA) must have at least one employer who employs 20 or more employees for the working aged MSP Rules to apply.

  • A multi-employer group health plan or MEWA that has at least one employer with 20 or more employees may prospectively request to except employees (and their spouses) of identified employers with fewer than 20 employees from the working aged provision.

  • Such members and their spouses are not subject to the working aged provision once an exception has been granted as long as the employer continues to meet the requirements for the exception.

Medicare is secondary payer to group health plans for individuals age 65 or over if their group health coverage is by virtue of the individual’s current employment status or the current employment status of the individual’s spouse.

  • Group health insurance plans for retirees or the spouses of retirees do not meet this condition and are not primary to Medicare.

The law requires employers to offer to their employees age 65 or over and spouses who are 65 and over of employees (of any age) the same coverage as they offer to employees and employees’ spouses under age 65.

  • For example, a group health plan may not provide benefits that are less for individuals age 65 or over or charge participants contributions that are higher for individuals age 65 or over since this would create an incentive for these individuals to reject the GHP coverage and make Medicare the primary payer.

  • This provision applies whether or not the individual age 65 or over is entitled to Medicare. This equal benefit rule applies to coverage offered to full-time and part-time employees.

Medicare beneficiaries are free to reject employer plan coverage, in which case they retain Medicare as their primary coverage. However, employers are prohibited from giving incentives to Medicare-eligible individuals to decline employer coverage. See Taking Account of Medicare below.

  • When Medicare is primary payer, employers cannot offer such employees or their spouse’s secondary coverage of items and services covered by Medicare.

  • Where an employer’s group health plan is the primary payer, but does not pay in full for the services, secondary Medicare benefits may be paid to supplement the amount it paid for Medicare-covered services.

  • If an employer’s group health plan denies payment for services because they are not covered by the plan as a plan benefit bought for all covered individuals, primary Medicare benefits may be paid if the services are covered by Medicare.