Medicare Coordination of Benefits Explained

Coordination of benefits is the set of rules that decides which insurance plan pays first when you have more than one. For people approaching Medicare with employer coverage, retiree coverage, or a spouse's plan, these rules can save or cost you thousands.

Here's how coordination of benefits works in plain English — and the mistakes that trigger surprise bills.

Why order matters

When you have two health plans, the primary plan pays first. The secondary plan may then pay some of what the primary plan did not cover. But secondary coverage rarely pays everything — it only pays up to its own limits and only after the primary plan has processed the claim.

The most common Medicare coordination scenarios

• Active employer plan (20+ employees): employer plan is primary, Medicare is secondary.
• Active employer plan (under 20 employees): Medicare is primary, employer plan is secondary.
• Retiree coverage: Medicare is primary, retiree plan is secondary.
• COBRA: Medicare is primary if you're Medicare-eligible.
• Spouse's employer plan: depends on your own employment status and the employer's size.

How claims actually flow

The provider bills the primary plan first. Once the primary plan pays, the explanation of benefits shows what it paid and what it did not. The remaining balance is then submitted to the secondary plan, which may pay some, all, or none of the leftover amount.

If the secondary plan never receives the primary plan's EOB, it may deny the claim. This is why keeping records and submitting claims in the right order matters.

Mistakes that cost people money

• Assuming the employer plan is primary at a small company. At under 20 employees, Medicare is primary.
• Treating COBRA like active coverage. COBRA is not creditable for delaying Part B and usually becomes secondary once Medicare-eligible.
• Not telling a provider about both plans. Providers need both cards and need to know which is primary.
• Ignoring the Medigap rule. Medigap supplements Original Medicare; it does not coordinate with employer plans.

What to ask your benefits administrator

• Is our employer size 20 or more for Medicare coordination purposes?
• Is our plan primary or secondary to Medicare?
• What is the process for submitting claims to both plans?
• Is our drug coverage creditable for Medicare Part D?

Educational only. Plan-specific coordination rules vary; confirm with your employer and a licensed agent before making enrollment decisions.